As expected (CI No 1,756), Alphameric Plc, struggling Old Woking, Surrey-based keyboard manufacturer, is recommending a cash call to its shareholders, in an attempt to raise UKP4.3m in working capital. Alphameric’s shareholders are being asked to consider a complex restructuring of the group’s share capital, as well as a share placing and open offer. The group warned that if the restructuring proposals are not approved, it is unlikely to be able to continue to trade. If indeed it came to that, it is doubted whether there would be any assets left in the company for distribution to shareholders. Chief executive Rodney Hornstein reckons there is very little chance of shareholders rejecting the proposals, particularly since Alphameric apparently has a strong order book and good long-term prospects if it allowed to stay in business.
Provisionally placed
The group yesterday reported a substantial reduction in interim pre-tax losses, to UKP377,000 from UKP1.8m, on turnover down 48% at UKP3.6m. Hornstein points out that the sales figures include FTT Alphameric, which was sold to a subsidiary of British Telecommunications Plc last September (CI No 1,756). Alphameric is 55%-owned by financial institutions, 25% by family trusts of the group’s founders, the balance held by company staff and the general public. The complex rescue plan, underwritten by Guinness Mahon & Co Ltd, involves a 60-for-two consolidation, to reduce the par value of the group’s original shares, in order to enable Alphameric to raise working capital by the placement of 20.6m new shares. Since it is against Corporate Law to issue shares at below par – the existing 5p shares were trading at 2.25 pence yesterday – the group will create a new class of ordinary share of 2.5 pence each and bring the existing ordinary shares of 5 pence each into line by consolidating every 30 existing shares into shares with a par value of 150 pence each, then subdividing each consolidated share into one new ordinary share of 2.5 pence and one deferred share of 147.5 pence; all rights will pass to the new ordinaries – the deferred will carry no rights and will be cancelled in due course. Shareholders will have their existing shares replaced by new ones on a two-for-60 basis, and 20.6m new shares have been provisionally placed: shareholders will be entitled to subscribe for 11 new shares for every two new shares held at 23 pence per share, and may subscribe for more, with no guarantee that any subscription over and above their entitlement may be scaled. The proceeds of the new share issue, facilitated by this action, will be used to improve sales and marketing activities, to invest in product development and, as indicated in September, to invest in new equipment at the group’s 14,000 square feet of manufacturing facility in Andover. Hornstein says UKP4.3m is more than enough to cover the work that needs to be done, so the group should not have to go through such complex proceedings again for some time. Thank goodness. Alphameric these days focuses on custom keyboards, point-of-sale systems and satellite data broadcasting systems. Hornstein says customers have increasingly been withholding their business, saying they’d rather wait until Alphameric has sorted out its financial situation – Hornstein interprets this very positively, seeing this as evidence that the business is there to be got, now that the group is putting its house in order. He says no company has made a serious bid for Alphameric, but says there have been tentative looks. If these looks translate into something more concrete after the share restructuring, then the board would look carefully at the potential of the proposals, before recommending them to shareholders.
