News blog
Wagon Group
- BY: Andrew Hore |
- POSTED: 13/10/2008 |
- COMMENTS: Add yours
One week after transferring from the Main Market to Aim Wagon is running short of cash and its shares have been suspended.
Any company that moves from the Main Market to Aim has to declare that it has 12 months working capital. Wagon did that. In August 2008, Wagon raised £49m in a 10-for-one rights issue at 4p a share. It also negotiated revised debt facilities of €155m but intended to reduce them to €125m after the sale and leaseback of two German properties for €34.5m.
Wagon designs and manufactures automotive parts and in particular automotive structures. It says the order intake in the six months to September 2008 was the same as the first half of the previous year. However, customers are reducing their production schedules and there has been a steep deterioration in the European automotive market. This year’s profits will be well below expectations.
Cost reductions are being implemented but the poor trading has put pressure on the invoice discounting facility. Wagon is talking to its main shareholder and its bank.
Wagon moved from the Main Market to Aim on 6 October 2008. The closing price on the Main Market was 1.925p a share. Just one month before the share price was 3.48p a share.
The move to Aim came about because Wagon did not have 25% of its shares in public hands as required by the Main Market. This happened because of an underwritten rights issue. Wagon joined the Main Market in 1936 and acquired Oxford Automotive in 2006.
At the suspension price of 1.25p a share, Wagon is valued at £16.7m.
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