Update: Judges are expected to approve tomorrow( wed july 28)) a deal allowing to dilute shares by 1000 per cent, raise fresh cash from foreign investors and pay off creditors so the company can save its Middle East operations and plan to sell off its London and Lincolnshire fire brigade contracts. Advisers, the current chairman,Tudor Davies, will also get big success fees for pulling this off.
Update: Trade creditors- from American Express to Grant Thornton – today (Thursday) accepted a 23p in the pound settlement for over £1.5m owed -writing off over £1m debts and AssetCo subsidiaries -including London- accepted a peanuts settlement (0.1p in £) for the £100m owed -paving the way for first step to save firm from total collapse but also pointing to sale of London and Lincolnshire fire contracts.
An investigation into the financial dealings of former bosses of AssetCo, the private owner of London and Lincolnshire’s fire engines, is underway by the firm, shareholders have been told.
A statement from the company says: “”The Company has recently received details of allegations in respect of the activities of its former management team. The Company is investigating these
claims and following the completion of its investigation may initiate proceedings.”
The disclosures come as shares have been suspended after the company sought yet another £14m from investors and massively diluted junk status share price, last traded at a mere 1.75p. The move comes as Bob Neill, the fire minister, will be urging fire authorities across England to privatise their services and hand over their equipment , training and vehicles to any private company that wants to make a profit from them.
Arcapita, the only bidder for the stricken company, walked after demanding auditors crawl over AssetCo’s accounts before it would talk any further about a take over. A statement was issued today saying it was not proceeding with the take over.
Worse, documents released to creditors reveal up to £5m of unpaid bills – including unpaid debts for corporate entertaining at sports fixtures ( £31,000 )and the use of private jets (£7000). The company blamed its former management and senior staff for leaving this trail of bills for high living, running up an unpaid card credit bill to American Express totalling £134,000.
Now one of the creditors, Bookajet, has told this website that it was left with unpaid bill of £7000 for a hired jet from John Shannon, the former chief executive, after AssetCo refused to pay it. According to a spokesman Mr Shannon appeared to have taken the jet for a personal trip and not on company business. AssetCo are not commenting about this but it looks like Mr Shannon is contesting it.
Bookajet say they have contacted debt recovery lawyers with the aim of seizing AssetCo’s assets.
It has also been revealed by AssetCo and the London Fire Authority that all the capital’s fire engines have never been owned by either of them – they are the property of state-owned Lloyds banking group- owners of the Halifax and Bank of Scotland. The new difference is that Lloyds along with other London banks is now a creditor as well as an owner. There are massive unpaid loans now totalling some £30m since AssetCo was launched.
So firefighters are combating riots and blazes in vehicles courtesy of Lloyds Bank ,giving a new meaning to the Black Horse’s advertising slogan ” for the Journey.” Lloyds are now both the owner and creditor to AssetCo London and promise not to auction them off to get their money back. London Fire Brigade issued a statement assuring their fire engines are safe.
Two highly embarrassing documents (see http://bit.ly/px5djv )have been sent to shareholders and creditors revealing the dire state of the company – and pleading with shareholders to accept a massive dilution in shares and creditors accepting less than a quarter of the money they are owed. Banks are being asked to reschedule debts.
Over £100m is owed by AssetCo to its subsidiaries,there are £17m in contingent liabilities to Lloyds, Barclays, Lombard and the Co-operative banks.
Grant Thornton, their auditors – the same company that missed the MetPro security company scandal in auditing Barnet Council’s accounts – are owed £267,000. EDF owed £18,000 in unpaid electricity bills, and even McGrigors, their solicitors based at the Old Bailey who are hosting creditors’ meeting for them, are owed £52,000. The Retained Firefighters Union, is also owed £12,000.
Even the pension scheme for London staff is at risk if it is not bailed out – the company admit taxpayers will have to pay out 90 per cent of the cost if it collapses.
Assuming the company is saved, the scandal is not yet over. Further litigation between the firm and John Shannon over money will come to court on December 5 as he likely to contest allegations of misusing AssetCo’s cash. Both Lincolnshire and London fire engine contracts are likely to be put up for sale. Only the interest in Abu Dhabi, where the firm works for the military, are likely to be saved.
London AssetCo will only be able eliminate £20m of its debts and be sold off with £30.6m debts. with Lloyds holding on to the fire engines. Lincolnshire has debts of £12m.
Anyone for privatisation after this debacle? Over to you. Mr Neill.