AMTE Power, whose plans to build a battery gigafactory in Dundee are hanging by a thread, said it has made “good progress” in negotiations with an unnamed equity investor that could see it avoid administration.

The company is hoping to secure a £2.5 million subscription and is conducting due diligence on the investor.

AMTE Power, which has its manufacturing operation in Thurso, the second largest cell manufacturing capacity in the UK, said it now has sufficient cash until the week commencing 27 November.

However, this will not be sufficient to finance the company in satisfying the conditions for completing the proposed subscription.

It is currently in discussions with equity providers and other interested parties to provide it with sufficient bridging finance through to completion, anticipating it will make a further announcement early this week.

If these discussions “do not conclude positively”, the company said it is unlikely to meet its financial obligations ahead of completion of the proposed subscription.

This would leave “no alternative” other than for the group to enter administration or “some other form of insolvency procedure”, AMTE Power said, under which the “prospects for recovery of value, if any, by shareholders would be uncertain”.

Shares in AMTE Power, which is quoted on the Alternative Investment Market, closed down 0.4% to 0.67p on Friday, valuing the company at just £1.12m.