McPhy Energy: A High-Risk, Time-Sensitive Gamble in the Hydrogen Sector

The race is on for investors in distressed hydrogen plays as McPhy Energy (ALMCP:ENXTP), a French electrolyser manufacturer, faces a June 13 bid deadline that could determine its survival. With its shares hovering near €0.50—a fraction of their 2021 peak—the company is a stark example of how quickly high-flying green tech stocks can unravel. For contrarian investors, this is a moment of extreme volatility: a potential white knight could emerge to salvage parts of the business, or liquidation could wipe out shareholders entirely. Let's dissect the risks and rewards.

The Clock is Ticking: Bid Deadline and Judicial Timeline

McPhy entered judicial reorganization on June 4, 2025, after failing to secure a buyer during conciliation proceedings. The June 13 deadline marks the cutoff for bids to acquire its assets, with a court hearing scheduled for June 24 to review submissions. The stakes are existential:
- If a buyer emerges, McPhy could retain key operations, potentially unlocking value from its three European production centers and intellectual property.
- If not, liquidation proceedings will begin, resulting in delisting and a projected residual value of zero for shareholders.

The chart below shows the collapse from €2.30 in early 2023 to its current price—a 78% decline—reflecting investor skepticism about its ability to navigate restructuring.

White Knight Possibility: Low Odds, High Impact

The search for a “white knight” (a buyer to fully acquire and rescue the company) is critical. The sole disclosed bidder so far is an unnamed European industrial player interested in specific assets, not a full takeover. This aligns with the company's focus on asset sales rather than a solvent (“in bonis”) restructuring.

Why a white knight is unlikely:
1. Industry headwinds: The hydrogen sector is crowded, with Chinese and U.S. firms undercutting European manufacturers on cost and scale.
2. Balance sheet carnage: McPhy's 2024 revenue fell to €13.1M (a 30% drop from 2023), with liabilities exceeding asset valuations. Even profitable buyers may balk at taking on its debt.
3. Fragmented interest: Subsidiaries in Germany and Italy have attracted bids, but these are likely for cherry-picked assets (e.g., patents or regional contracts), not a full acquisition.

Upside scenario: If the European bidder agrees to a partial acquisition (e.g., its German factory or Italian engineering team), shares could spike temporarily. However, this would leave unresolved liabilities, making sustained gains uncertain.

Residual Value Risk: All In or All Out?

The worst-case scenario—liquidation—is priced into the stock. McPhy has already warned shareholders of a nil residual value if bids fail, as asset sales would not cover debts.

Key risks to quantify:
- Liquidity drain: Cash reserves of €39.6M as of late 2024 were projected to last until mid-2025. The June 24 court decision is the final lifeline.
- Operational collapse: Even if parts of the business are sold, the remaining operations (e.g., the struggling refueling station division) could drag down value.

The ratio has skyrocketed to over 200%, signaling extreme leverage and a lack of equity cushion.

Contrarian Play: How to Gamble Wisely

For investors willing to bet on a last-minute miracle, here's how to approach:
1. Entry point: Buy at current levels (near €0.50) only if you believe a partial sale is likely. A 50% jump to €0.75 would still leave room for upside if assets fetch more than expected.
2. Stop-loss discipline: Set a hard exit at €0.30—below this, liquidation fears dominate.
3. Time horizon: The window closes after June 24. If no buyer emerges by then, the stock could plummet to €0.

Alternative angle: Short sellers might target McPhy if bids fail, but borrowing costs could be prohibitive given its low float.

Verdict: A Hail Mary for Speculators, Not a Core Holding

McPhy is a textbook distressed debt play with a 50/50 shot at partial survival or total collapse. While the hydrogen sector's long-term potential is undeniable, McPhy's execution failures (e.g., delayed revenue from its flagship Djewels project) and poor capital allocation have left it uniquely exposed.

Final advice:
- Go long: Only if you're all-in on a white knight appearing and can stomach losing 100%.
- Stay out: If you can't afford to lose, wait for clearer signals post-June 24.

In the hydrogen race, McPhy's story is a cautionary tale: even pioneers can be overtaken by faster, cheaper rivals. For now, the clock is ticking—and the odds remain stacked against a happy ending.