April 20 will be a day of reckoning for AssetCo, the company that owns London’s and Lincolnshire’s fire engines and was used by the London Fire Brigade to try to break striking firefighters. It has until April 20 to answer in the Companies Court following a winding up petition from Revenue and Customs which could lead to the company and its subsidiaries being put into administration.
On that day it will have to answer a petition from Revenue and Customs to repay anything between £5m and £8m ( we don’t know exact sum – winding up petitions are secret documents) in overdue tax or go into administration. And a banker will move in to own London’s fire engines.
This scandal would have never seen the light of day if the directors of AssetCo, led by chief executiveJohn Shannon, had not been hoping to pull off a big coup and make a small fortune by allowing their company to be taken over in the wake of the publicity over the London fire dispute.
Whatever company examined their books – we don’t know the name – obviously did not like what it saw and suddenly talks were over and shares plummeted. They have not recovered and were trading at 17.5 p yesterday rather than 70p at their height. Within days the company admitted it had to repay some £50.6m of debt and find £8.5m working capital including plus a £3.5m urgent overdraft from the bank. Seven days later it announced that it wanted the same shareholders who had seen their investment plummet to give them another £8m.
It stated: “The Directors believe that with the cooperation of the Company’s creditors and banks, the current financial strain on the Company will be temporary, and the additional funding resources referred to above will ensure that a more appropriate capital structure will be in place to support the future growth of the business. ”
What it did not tell anybody was that two days after the announcement it was in front of the Companies Court in The Strand in London pleading for a delay against a petition from Revenue and Customs to wind up some nine of its companies because of long overdue tax.
I am told that Revenue and Customs never issue winding up petitions unless a lot of money is owed and there has been a prolonged period when tax due was never paid.
The company now says it has a £120m new contract from the United Arab Emirates and it has hived off London from the any forced administration so no-one should worry.The London Fire Brigade officially appear unflustered. A spokesman said: “We plan for all events that could affect the fire and rescue service we provide and do not anticipate an impact on London’s fire engines.”
I understand London Fire Brigade are expecting if AssetCo goes belly up that a bank will take over ownership of London’s fire engines. Then either negotiations will start about the brigade taking back ownership of the engines or another bidder – and the rumour is it might be Babcock who already have firefighter training centres and run Firebuy’s emergency vehicles – could take over.
No wonder Matt Wrack, general secretary of the FBU, is demanding assurances from Bob Neill, the fire minister.
As he put it: “The safety of Londoners, and of London’s firefighters, is in the hands of a company which could be wound up in six weeks time because of tax debts. At the least, this will mean that there is no one to maintain London’s fire engines. At the worst, it could mean that London forfeits its fire engines to pay AssetCo’s debts.
We have all known for some time that AssetCo was suffering from financial problems, though it is only now that I have discovered they are so serious as to put its future in doubt. I do not know how long Councillor Brian Coleman, chair of the London Fire and Emergency Planning Authority, who is close to AssetCo’s senior management, has known the situation. ”
To me it is very simple. If this was publicly owned none of this would have happened. And what happens with AssetCo now could be harbinger of what is going to happen on a massive scale when everything else is sold off across the country.
Do we really want something as precious as saving lives dependent on whims of bankers and companies? The owners appear to have built up tax debts while their directors pay themselves huge salaries and get huge sums in dividends?
Londoner’s lives are more important than receiving a £350 Christmas hamper from Harvey Nicks (as Brian Coleman has) from grateful businessmen busy making profits out of public services.
Update March 3: AssetCo is seeking to place £16m of shares at a knock down price of 10p a share – nearly a 30 per cent discount – onits closing price of 13.8 p a share last night – to urgently raise funds to payu debts ands tax bills. The offer is being underwitten by its own brokers and adviser, Arden Partners, with a promise from chief executive,John Shannon, to guarantee its overdraft. Other directors are subscribing for £116,000 worth pof the £16m shares.
The statement warns: “If the Placing does not proceed, the Directors believe that the Company will not be able to continue in its cutrrent form”.A spokesman for the company yesterday claimed it was already oversubscribed. Meanwhile the shares had fallen a further 1.5p to 12.50p