AssetCo chief defeated as it raises £16m

ASSETCO’s shareholders raised £16m in emergency funding yesterday after a court ruling forced its chief executive to comply with the plan.

Shareholders were granted an injunction that required John Shannon, also AssetCo’s largest shareholder, to vote in favour of a plan to place 160m shares at 10p per share, two thirds of its closing share price on Monday.

“The net proceeds will be used to address the company’s short term liquidity and funding issues, to assist in the restructuring of the group’s indebtedness and to provide working capital for the future development of the group,” it said in a statement.

Its shares closed 8.45 per cent lower yesterday at 14.19p.

AssetCo, which provides fire engines to the London Fire Brigade, said a range of shareholders took part in the placement. Investors North Atlantic Value, Gartmore and Utilico Investments, which held a combined 17.5 per cent of AssetCo before the placing, had said they were willing to provide £10m between them towards it if the company appointed a new executive chairman.

The resolutions yesterday voted in Tudor Davies of touch sensor products maker Zytronic, to take that role.

Sources close to the deal told City A.M. shareholders had grown “fed up” with dealing with Shannon, who led a management buyout of AssetCo in 2005.

Shannon had promised to support investors but on Monday refused to vote for the plans, plunging the placement into doubt and causing AssetCo’s shares to be suspended from trading. Shannon had also supported AssetCo’s sale to Bahraini investment firm Arcapita, which shareholders rejected last week.

TIME LINE | FIRE FIGHTING AT ASSETCO

23 December 2010
AssetCo sells three firms – Supply 999, Todd Research and AS Fire & Rescue Equipment – for £5.25m.

27 January 2011
Share price rises on rumours that it may be in sale talks with shareholder JO Hambro.

31 January 2011
Share price jumps 18.4 per cent after the board confirms it is in takeover talks with a company, but not J O Hambro. It appoints Evolution Securities to advise it.

8 February 2011
AssetCo admits it is struggling to fund £4m of short term debt as its £50m long term debt facility was taking longer than expected to refinance.

14 February 2011
Its shares fall almost 25 per cent as it admits it had been forced to end talks with its potential buyer to concentrate on meeting its funding issues.

21 February 2011
AssetCo’s nominated adviser Arden Partners proposes it raise £8m from shareholders as well as refinance existing debt facilities.

23 February 2011
AssetCo says it will obtain waivers from its banks and creditors on breaches of its debt facilities to allow the fundraising to go ahead.

3 March 2011
It proposes a share placement of 160m shares of 10p each to institutional investors to be completed by 21 March.

14 March 2011
AssetCo’s board rejects an unnamed preliminary bid revealed to be from Bahraini private equity fund Arcapita. AssetCo describes the approach as “opportunistic” and says its principal banker RBS has loaned it £1.45m.

18 March 2011
AssetCo’s creditors ask for early payment following the bid rejection. AssetCo says major shareholders agree to supply up to £10m if needed until the share placement is made.

21 March 2011
Three shareholders – North Atlantic, Gartmore and Utilico – agree to supply £3.33m each, on condition that Tudor Davies replaces Tim Wightman as chairman.

AssetCo shares suspended after chief executive John Shannon says at a meeting he may not vote for the planned fundraising. AssetCo says the company may go into administration if the fundraising does not go ahead.

22 March 2011
Court grants shareholders an injunction specifying that Shannon must vote for the proposals. Meeting is reconvened, all resolutions are approved and £16m is raised.