AssetCo, the troubled company which owns London and Lincolnshire’s fire engines, and is £140m in debt, has managed to negotiate a further lifeline from its investors.
The company which faced being wound up today (July 25) at a High Court hearing in London has gained another month’s grace until August 25 to conclude the deal.
A statement from the company said:””the Board of AssetCo has been in discussions with certain of its major stakeholders (being North Atlantic Value LLP, a part of the J O Hambro Capital Management Group, Utilico Investments Limited and Henderson, which incorporates the interests of Gartmore Investments Limited), ” for further refinancing of aanother £10m.
The price to be paid will be another dilution of the shares – worth just 1p before the deal and 2.50p – after the deal became public, and banks and other creditors will not get all their money back either.
The statement continued:”The strategy will focus on developing the Middle-East business into a leading emergency services platform and on running the London and Lincoln contracts. The refinancing proposal to be approved by shareholders will involve the ring-fencing of the LFEPA (london fire brigade)for the benefit of the London subsidiary lender group, although shareholders will retain an interest in any residual value. The Investor Group intends that following this fundraising, the Company will continue to be listed on AIM.”
The company also said that talks were an advanced stage with a bidder-assumed to Arcapita, the Bahrain based private bank (see previous post), but significantly Arcapita has not signed the deal.
At Monday’s hearing the court was told professional fees for lawyers and financial advisers amd the directors are costing £100,000 a week.
Mr Justice Floyd warned that if the new private-sector bid failed, it could leave AssetCo with “nothing left in the kitty “.
“If it is not successful then the assets of the company would look to be depleted by the professional fees being charged to the point where there will be nothing left in the kitty to reimburse creditors of any description “ he said.
Professional costs to cover just a fortnight’s work restructuring and refinancing the company in the run up to a new bid were detailed in court. AssetCo directors Tudor Davies and Tim Barrett would charge £40,000 plus VAT, solicitors £112.824 plus VAT and financial advisors would be invoicing for £50,000 plus £5,000.
The scale of debt-laden AssetCo’s financial meltdown was disclosed in court – £2.2M at the end of June had shrunk to just £700,020
Creditors supporting the company’s call for the wind-up order to be adjourned included North Atlantic Value, owed £15.9M by AssetCo. The company, part of the J O Hambro Capital Management Group, which is proposing to contribute to anothedr £10m refinancing deal..
Matt Wrack, general secretary of the Fire Brigades Union said : “ These assets should be brought back into public ownership. At the court today, we heard lawyers haggling over remuneration fees ASSETCO – costs soar as “new bid” staves off wind up – but still no assurances for Londoners.
PrIvatising essential services in crazy, as the AssetCo debacle continues to show. Fire engines in London and Lincolnshire should be brought back into public ownership as soon as possible.”