News blog
Wallgate Group
- BY: Andrew Hore |
- POSTED: 26/10/2008 |
Wallgate Group has place the Hitchens retail business in administration and needs to raise more cash.
Poor retail sales over the summer have put pressure on working capital. Hitchens was already losing money and the losses continued. This will help Wallgate cut its overheads and stem those losses.
Wallgate retains two stores - in Runcorn and Beeston - and e-commerce operations Hot Deals and Best Price Trading. The core business of the wholesaling of discounted electrical products will also continue. There should be more opportunities to buy up stock at discounted prices as other businesses run into trouble.
Wallgate needs at least £1m to continue trading but £1.5m would be better. The company plans to raise the cash from a share placing.
At 2.5p a share, Wallgate is valued at £5.16m. The placing price has not been determined but it will probably be below the current share price.
Chairman and chief executive Howard Strowman and finance director Simon Fine will not draw their salaries in October 2008.
Clearance retail outlets operator Hitchens Group joined Aim on 14 August 2007 when it reversed into Plus-quoted shell Azurite Investments and raised £2.32m at 0.75p a share. This is equivalent to 7.5p a share after the 10-for-one share consolidation on 24 September 2007. Hitchens bought Wallgate Services for £8.76m and Plus-quoted shell Flarepilot for £500,000 in April 2008. At the same time £1.1m was raised at 13p a share. Hitchens changed its name to Wallgate Group on 16 June 2008.
Wallgate has relationships with manufacturers and retailers and it takes the returned consumer electronics products from them and sells them on. It does this through a revenue share model where it gives the manufacturer/retailer a share of the money it receives, after refurbishment expenses, when they are sold on. Some of the products in any particular batch do not work but the majority do and parts can be taken out of the ones that do not work to repair others.
An EGM will be held in November to restructure the share capital so Wallgate can issue more shares.
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