7digital’s directors have revealed that the company could be heading into administration by the end of July.
According to a statement issued to the Stock Exchange following the b2b music service’s AGM, the company needs to raise £4.5 million by July 31 to avoid entering administration.
New York-based eMusic president Tamir Koch made a majority investment of £1.3m in 7digital earlier this week.
However, the company’s investors rejected a plan at the AGM to issue more shares for cash. 7digital said that makes administration a real possibility.
“The company currently believe that it still needs to raise additional funds of at least £4.5 million by 31 July 2019, failing which it is highly likely that the company would need to be placed into administration,” said a statement.
It added that directors are “extremely disappointed” with the rejection of the plan by shareholders. 7digital will now engage with investors with a view to securing their support for a follow-on financing.
Last summer 7digital was forced to apologise for a "lengthy delay" in publication of its financial results.