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Mavinwood

  • BY: Andrew Hore |
  • POSTED: 12/02/2009 |

Mavinwood is looking to secure additional cash and one option is a share issue underwritten by its main shareholder.

The document handling and emergency repair services provider is also considering selling assets but it has entered into an agreement with Geraldton Services Inc to raise up to £10m from a share issue in order to maintain the support of its banks. Other shareholders will be given the chance to take up shares if the fund raising goes ahead. 

Geraldton will underwrite the share issue if Mavinwood breaches its bank covenants at 30 June 2009. If they are not breached it does not have to happen. Geraldton is making a loan facility of £2.5m available at an annual interest charge of 10%. The facility is repayable on 30 June 2009.

Geraldton is getting a fee of £750,000 on 1 July 2009 for these arrangements, whether or not the shares are issued.

The banks will receive a fee of £165,000 and will charge an additional 1.5 percentage points on the existing interest charge.

At 3.25p a share, Mavinwood is valued at £15.1m. This shows how dilutive the proposed fund raising could be.

Lord Ashcroft controls Geraldton, which has been a major shareholder in Mavinwood since the company joined Aim as a shell and became a majority shareholder after the first acquisition. At the end of November 2008 Geraldton increased its stake to 57.1%.

Mavinwood joined Aim as a shell on 5 November 2004. At that time it raised £2.14m at 10p a share. It has subsequently made a number of acquisitions in area of document handling and emergency repair.

The Mavinwood share price was hit in September 2008 by the news that the emergency repair division had lost a major contract.

Mavinwood reported a fall in interim profits from £2.94m to £899,000 in the six months to June 2008. Stripping out amortisation and share based payments the fall in profits was from £3.86m to £2.14m. Revenues increased from £29.5m to £36m.

Net debt was £33.3m at the end of June 2008.

Mavinwood is still expected to make profits of £5.5m for 2008. 

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