A poor start to the financial year means that Smallbone’s recently announced financing package will not be enough.
This news sparked the suspension of shares in the fitted kitchens company. At 17.5p a share, Smallbone is valued at £4.38m.
Sales in February have fallen and there has been a significant decline in deposits from customers. Smallbone had negotiated a financial package of up to £5.9m from Barclays and the purchase of a cash shell from Pekak Limited Partnership. This package was not cheap. Interest rates were high and Barclays will receive a fee of 6% of Smallbone’s market capitalisation when certain conditions are triggered. These conditions are triggered if the company is sold, Smallbone refinances its outstanding bank debt or at the latest on 31 December 2011.
Smallbone says that it needs to be part of a larger group with a stronger balance sheet so the Barclays fee could be triggered sooner rather than later. A strategic review of Smallbone’s options is being carried out.
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