Engineer Widney is raising additional cash so that it can continue to trade.
The weak automotive market has hit the underlying businesses and they can’t contribute cash to the holding company. Widney needs cash because of its ongoing liabilities to its pension fund and Darby Properties, the landlord of Widney‘s Northampton properties. Widney has amade agreements with these creditors but it needs more cash for working capital.
A share placing at 1.5p a share will raise £425,000 before expenses - £325,000 net. Widney is also issuing £245,000 of secured loan stock.
The shares fell 0.875p to 2.5p each on the news of the refinancing. That values the existing share capital at £650,000.
There are two Northampton properties leased from Darby. The lease of unit 61 has 13 unexpired years at an annual rental of £145,000 excluding insurance premium and council tax. Widney can surrender this lease in return for 1.5m shares and £60,000 for dilapidations. Widney will retain the lease to unit 60 and will market it with Darby.
Widney’s pension fund deficit is £1.04m. The company has been paying £157,000 a year into the pension fund. Widney wants to stop paying cash into the pension fund between 1 January 2009 to 1 January 2012. In return it is issuing 6m shares to the pension fund. If these shares increase in value over the three year period then the gain can be used to offset the deficit.
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