AssetCo searches for short-term cash

Marion Dakers
OURSOURCING group AssetCo is planning an emergency £8m share sale this week after delays to its refinancing put further strain on cash flow.

But the Aim-listed firm’s shares closed up 4.2 per cent after a late-afternoon announcement of a £120m contract to provide fire fighting equipment and training to the United Arab Emirates.

The firm, which provides equipment to the London Fire Brigade, was forced to announce details of the lucrative deal to the market after it was leaked at a Middle Eastern trade show.

AssetCo called off takeover talks two weeks ago to focus on its cash problems and said yesterday it needed £8.5m of extra capital to bridge a temporary funding gap.

Geoff Allum, an analyst at AssetCo’s broker Arden Partners, told City A.M.: “We’re feeling fairly confident that this situation will be resolved in a positive way.

“It’s very unfortunate that this company that has very high visibility on its contracts has this short-term funding issue, but I am sure we will manage it.”

Northland Capital analyst Andy Hanson said: “While the financing issues could be resolved shortly, the longer term reputational impacts could last some time and undermine the progress of the business.”

The Fire Brigades Union (FBU) said in a letter printed yesterday it continues to have concerns over AssetCo’s performance.

FBU general secretary Mike Wrack wrote to the London Fire Commissioner to argue that AssetCo cannot guarantee a serviceable fleet.

AssetCo’s Aim-listed shares tanked 25 per cent after the news of the share sale, but closed up 4.2 per cent at 25p following the UAE announcement around half an hour before the market closed.