Additional Explanations Regarding the Reorganization of Elmo Group's Parent Company
The management of Elmo group's parent company believes that reorganization is a positive alternative and an opportunity for the company. To reassure the shareholders, fans, critics, partners, and creditors, the management, along with the major shareholders, and the team, is convinced that there are many reasons to strive for success. To focus on the top priorities, it is necessary to gain additional time and protection for the implementation of strategies and fundraising.
What are Elmo group's current top priorities?
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Streamlining the environmentally friendly vehicle sharing service and selecting a new partner to ensure the sustainability and rapid growth of the new business strategy, "door-to-door delivery service."
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Maintaining the development and sales momentum of the remote driving technology in the subsidiary and raising additional capital from investors.
To achieve these goals, difficult decisions, including unpopular ones like reorganization, need to be made.
What is our plan?
The parent company of Elmo group is actively seeking a partner or buyer for the short-term rental business direction, with several parallel negotiations underway. However, selecting a suitable partner and confirming the transaction may take several more months. Negotiations are being held with foreign companies, and the management hopes that interest from Estonian companies will also increase. Until a new partner is selected, the parent company of Elmo group has implemented reorganization measures to transform and focus the short-term rental service for business clients, reduce ongoing costs, mitigate losses from reduced focus, and reduce obligations to creditors. The strategy is based on the low season for car-sharing services, which started in October and lasts until spring 2024.
Regarding short-term rental, our main tangible asset is the car fleet, and intangible assets include IT systems (car fleet operating system and a new app launched at the end of last year, featuring "door-to-door delivery capability" and creating opportunities for additional services, such as integrating taxi services). The extension obtained through reorganization allows us to dedicate ourselves to ongoing negotiations and finalize transactions, with the expected revenue covering the obligations related to short-term rentals.
In addition, the parent company of Elmo group aims to support and protect the technology subsidiary to maintain its position as one of the leading developers of street-level remote driving technology and active sales negotiation momentum globally. This naturally requires additional investments, which started in the summer and are in active negotiation despite the hectic macroeconomic climate.
How has the situation of the parent company of Elmo group evolved?
We have not hidden the payment difficulties related to the rental business and have shared this information with our creditors to the best of our ability, actively seeking and entering into new agreements. We had planned and promised to catch up with obligations by September-October, but the relentless economic environment has not supported this, and the processes are still unfolding. We respect that if the deadlines and promises given to creditors have not yet materialized, they must fight for their rights. We are doing the same with our debtors. The largest shareholders have injected over €250,000 into both business directions this semester and, as the latest action, have exchanged claims against their assets.
We still believe that Elmo's environmentally friendly vehicle doorstep rental service (with over 30% of all sessions already featuring doorstep delivery) has value worth advancing with new partners. To protect this value, we have chosen reorganization while waiting for goodwill and patience from creditors, to which the owners and managers of the reorganizing company respond with dedicated work.
The parent company of Elmo group wants to continue its economic activities and believes that by implementing the above measures, it is possible to continue and cover ongoing obligations to employees, creditors, and suppliers until additional investments are raised and the short-term rental business direction is sold, after which partial or complete premature liquidation of incurred claims is possible.
Signed:
Enn Laansoo, Jr.
CEO, Management Board Member
Shareholder
Priit Haljak
Advisory Board Member, CTO
Shareholder
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