On Monday, October 23rd, the market got two press releases from the Israeli company Highcon. Highcon is for sure suffering, and on October 18th, there was a general meeting with an undisclosed agenda.

You don't have to be a professor guessing the agenda - which, I believe, has almost become one of the sub-headlines in the press releases - namely "Restructuring and Newly Focused Business Plan."

The Board had to do something.

When a company suffers, time is critical; when a publicly traded company suffers, time is even more critical, but so are announcements to the public, and after finally getting highcon.net back online, investors could read about products, see the development in share prices, but not much about neither the situation that has led to a drop in value of almost 97% since the IPO back in November 2020. Or, to be more precise, the restriction plan delivered to the Tel Aviv Stock Exchange was only delivered in Hebrew.

We have Google Translated these documents so you can easily understand the measures taken.

The owners of the shares, which for the majority are a few private equity companies - Landa Ventures, JVP, and LR Group- are seeing their values disappear. Still, more importantly, the cash situation is life-threatening.

And then, the two press releases ticked in. Which one of them is more important is a good question. In the short term, the announced sales of two new BEAM 2C machines, sold to Eurographic and Westrock (their third machine), is good news for the cash flow. Current shareholders will add a minimum of 2.5 million dollars, which is also good - but terms apply!

Finally, the bank currently offering Highcon convertible loans has agreed to extend its credit, again based on a plan to find more investors in Highcon. All this is good news, but maybe announcing a strategic partnership with BHS-Corrugated is the best news - and unfortunately also the least substantial - in the short-term, at least!

BHS Corrugated is one of the largest suppliers of corrugators in the world, and of course, selling Highcon can expect the benefits of the collaboration. Still, we are pretty convinced that the advantage of this collaboration is more substantial for Highcon than for BHS. So BHS sells machines that, at some point, deliver boards that need to be cut. Last week, we published a film from the German packaging giant Thimm's operation in the Czech Republic, where you see the Highcon BEAM 2C in operation. I was just about to say side-by-side, but that is not the case. The BOBST flexo machines and the BOBST die-cutters are the machines that produce the majority of the finished products, and the BEAM is handling short-runs, specialty products, and products that are suitable for Thimm. The BEAM is not fast enough to work side-by-side, and that, to us, at least, leads to a question: why an interest from BHS in Highcon?

We have also covered BHS intensively from their open house, where we both saw the new BHS Jetliner Inkjet printer (the size of a house) but also got a better understanding of the BHS Box Plant 2025 plan, which is an enormous, ambitious plan for how they see the future in corrugated packing. And I don't know how any current Highcon machines fit into this plan. BHS does not sell machines from other vendors, as far as I know, so what is the reason for the collaboration?

I will get into some speculations in a moment, but before that, let me share my view on why this is tremendously important for Highcon. Partnering with one of the most important companies in the corrugated market is significant. It gives Highcon a trust boost, and the market will, I believe, see Highcon as an accepted technology that is now playing with the big boys. Be aware that BHS is also partly owned (tiny stock position) by BOBST - and now to my wild speculation.

Highcon engineers and leadership, of course, know the bottlenecks of the Highcon machines - and to be straight on - speed, size, and support are what it takes to deliver to the big boys. As Highcon has spent quite a lot of money on R&D in the past years, maybe BHS is betting on a Highcon technology that matches their size and speed.

This is not published information but speculation that could give Highcon the needed technology leap and become a true competitor to the analog production methods.

This is, of course, speculations, but I can't see any reason why BHS should give Highcon the credit of collaboration since Highcon will have limited options to surviving in its current state unless investors throw more money after it, and will any investor invest more, if they don't see the future I just described?

Highcon doesn't have much competition in the high-end, larger format, industrial-scale laser finishing, and nobody, to my knowledge, has the expertise, so why don't Highcon announce what they are developing? If I am right about my speculations, it would be a MAJOR breakthrough for Highcon. If they 'only' have the next ITERATION of any of their current machines, I honestly doubt that they can grow fast enough.

Highcon's burning cash rate is relatively high, and the reconstruction plan addresses this, but only with about 10 million dollars - which, in today's world, isn't that much. The fresh cash also depends on the plan the Board is trying to secure - attracting more investors. Highcon can't survive without new investments for between 8-12 months, I believe. Before the IPO, rumors said that other companies were interested in Highcon, but again, that didn't happen. Now, the value of Highcon is meager, and the company, despite the layoffs and the proposed changes, is still very fragile.

The best thing for Highcon is that everything they wrote in the original IPO about market trends and developments takes place at an even higher pace. Digital Transformation is here now, and finally, both binderies, printers, converters, and the packaging industry have realized it - and despite all your problems - my friends - you are ahead of the competition, so show now that high-speed, tool-free, digital finishing is here and ready to compete with analog production.

Another reason why Highcon needs more speed is the digital print engines. The new AGFA SpeedJet 1060 deliver more than 11,000 B1 sheet an hour and is an excellent example of how fast the development is on printing devices now, and to have digital finishing that become the bottleneck is not an option. So please tell us what you are developing, and open your R&D a bit more to attract the investors needed to secure your future! I cross my fingers!

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