Healthcare Locums, the troubled medical staff provider, outlined plans to raise £60m in emergency funding to pay down its debt as it posted a £56.5m loss for the year to the end of December.
The 2010 accounts have been delayed until now by an investigation into Healthcare Locums’ accounts after the board in January said it had found irregularities in the accounts.
That news led to the departure of the company’s founder and chief executive Kate Bleasdale and the suspension of its shares on the London Stock Exchange, but the board has now reported the outcome of the probe.
The board wrote off £19.3m in adjustments on the value of software, sales, its database of medical candidates for placement, and the under-accrual of costs in 2009.
That took the company’s net equity for at 31 December 2009 from a previously reported £67.2m to just £50m.
Healthcare Locums also took on a $150m loan from two Australian banks last December based on its previously-reported figures, just weeks before the board raised a flag over the flaws in the accounts.
Those loans have reportedly cost it up to £1m a month in fees, and the £60m rescue fundraising aims to repay much of that debt.
But the proposed deal would issue 600m new shares at just 10p per share, a dramatic fall from Healthcare Locums’ share price on suspension of 112p.
The placement would see the company’s major shareholder Toscafund buy more than 336m of new shares for £33.6m while a second investor, ACE, will buy £13.2m worth of shares.
The placement will dramatically dilute the shareholdings of all other investors in the company such as private equity funds Permian Investment Partners, which owns 6.5 per cent of the company, and Arundel Capital, an 0.5 per cent owner.
Those two funds responded angrily, in open letters published in June and July, to refinancing plans similar but not the same as the current proposal that would have Toscafund dramatically raise its stake in the company.
They are now understood to be unhappy that the financing restatements show Healthcare Locums to be in reasonable health while its equity has been sold to Toscafund at a low price.
HCL shareholders will be given the opportunity to vote on the share placement at a general meeting on September 12 at 11am in London.
The company warned that if the proposal was not approved then, it would be unable to meet its loan agreements and a default would result in insolvency that "would, in the board’s opinion, result in shareholders receiving no value for their current shareholdings."