6. Short-term interest-bearing liabilities

As of 31 December 2023, the short-term liabilities consist of loans from shareholders in the amount of CHF 8.5 million (2022: CHF 7.1 million). The accumulated accrued interests due to shareholders of CHF 0.5 million are presented as accrued interest expenses against shareholders. Also included is a loan from third parties in the amount of CHF 6.5 million (2022: 0.5 million). Due to its maturity, CHF 6.0 million was reclassified to current liabilities. Loans as well as accrued interest maturing at the end of 2023 could not be repaid and were subject to a new agreement reached in December 2023.

Going Concern – Debt restructuring / refinancing

The company has significant financial liabilities that are due and payable until the end of 2024. The company is convinced to find a solution to restructure its financial situation and as such to fulfil all obligations with the existing lenders who are at the same time important shareholders with whom the company maintains close contact and regular exchange. Nevertheless, the liquidity of the Group is currently under pressure until having solved these obligations.

Based on the liquidity plan prepared by the Board of Directors and Management, the company is expected to generate sufficient cash to be able to operate for the next twelve months until 31 May 2025. However, based on the liquidity plan, the company will face difficulties in fulfilling its obligations from financing activities. Therefore, the Board of Directors is closely monitoring the company’s solvency situation as well as assessing its liquidity position to take necessary actions to mitigate these risks. The Board of Directors is committed to act with the required urgency and will provide updates to stakeholders as appropriate.

After having successfully restructured the business in 2023 to the extent possible, the Group is taking further steps to address the uncertainties and improve its liquidity position, including exploring additional sources of financing, and seeking to refinance its current debt obligations. Measures that have been initiated but are not all fully completed yet include:

• Signed standstill agreement in place with the current lenders until the end of 2024, a termination of the agreement as of 30 September 2024 is possible however Management does not have any indication of such intent by any lender.
• Board of Directors and Management developed a financial restructuring plan, which foresees to reduce the financial indebtedness and increase capital. A term sheet has been drafted and shared with lenders. There is ongoing discussion with lenders and the company is convinced to find a consensus with lenders.
• Management has started a project with the goal of divesting non-essential assets. For that purpose, mandates to external parties have been given and discussion with potential buyers have been initiated.
• Management has prepared a detailed 10-years business plan which is used to approach potential new investors.

The company’s ability to continue as a going concern is dependent on its ability to generate sufficient cash flows from operations, ensure refinancing and/or restructuring of existing finance obligations and obtain additional financing to meet its obligations as they become due. The Board of Directors has not yet been able to raise sufficient additional financing to meet the financial obligations that will be due in 2024. Consequently, there is a material uncertainty that raises significant doubts about the company’s ability to continue as a going concern. If the company is unable to address these material uncertainties and to secure its liquidity position, it may be unable to continue as a going concern. If such a situation arises, the financial statements would need to be prepared based on liquidation values.

The Board of Directors and Management expects that the proposed measures will be successful, and their effects will be to strengthen the liquidity of the Group and assure its financial stability in the long term. Therefore, the Board of Directors and Management believe the going concern assumption of the Precious Woods Group is given.