News blog

Timestrip/ Mungo Trading

  • BY: Andrew Hore |
  • POSTED: 06/05/2010 |

Timestrip is selling its smart label technology business and becoming a shell.

The operations will be sold for £160,000 in cash plus deferred consideration of up to £65,000 to a consortium of existing shareholders which includes three directors. The deferred consideration is dependent on the receipt of R&D tax credits. The buyer will also take on £7.5m of intercompany loans.

Timestrip will change its name to Mungo Trading and its main asset will be the £160,000 in the bank.

The disposal should be completed on 1 June if it is approved by shareholders.

All the directors will resign except for Jonathan Steinberg. Newly proposed director Mark Nelson-Smith is a former investment banker with UBS. He is a partner in Talisman Management, which provides turnaround/transformation management for private equity and distressed lenders. He is also a senior adviser to One Square Advisors, an independent financial restructuring advisory firm based in London and Munich.

The new investing policy of the company will be to acquired companies in the “general engineering or industrial products sector within the United Kingdom or Europe”. It will acquire majority stakes in companies with proven management.

If shareholders do not agree on the new investing policy then they can vote to wind up the company and appoint Fisher Partners as liquidator. The company estimates that shareholders could receive a distribution of 0.03p a share if they vote for winding up.

Timestrip reversed into a shell on 28 February 2005 but the development of the business has taken much longer than expected and the company has consistently lost money. Timestrip only had enough cash to keep it going until July. House broker FinnCap could not raise £1.25m for the company, although there were pledges of £400,000. Structured debt finance was not available.

The shares were suspended on 19 April 2010 at 0.3p each. The £6.4m reversal of Timestrip and a £3m placing were done in February 2005 at a price of 4p a share. Prior to this Timestrip was known as Internet Music & Media and had gone through a company voluntary arrangement because the internet music business had not succeeded. There was a 50-for-one consolidation at the time.

Shell company Chandra acquired Groovetech to form IMM in April 2000. A 72% stake in Groovetech cost £8.8m in shares and £2.41m was raised from a placing and open offer at 158p a share - 7900p post-consolidation. In August 2001, IMM raised £1.85m at 12p a share - 600p post-consolidation.

Chandra joined Aim in October 1999 at 25p a share – equivalent to 750p a share post-consolidation.

That means that in less than 11 years the share price has fallen from 750p to 0.3p and there is a prospect of getting 0.03p a share back if the company is wound up.

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