Proventec cleans up its balance sheet

LIVERPOOL-based Proventec insisted that its recent restructuring and sell-off of non-core assets leaves it “in a much stronger position to deal with financial pressures” after declaring a post-tax loss of £29.5m during the 18 months to September 30.

The company, whose shares were readmitted to AIM earlier this month after coming up with a new Scheme of Arrangement allowing it to reduce its debts and simplify its balance sheet, said that  the work it had undertaken in restructuring its finances “gives the company its best chance to deliver its plans”, according to chief executive David Chestnutt.

He said the firm would now concentrate ion its two core businesses of selling dry steam equipment and janitorial supplies to its customers.

Chestnutt argued that Proventec had signed a number of important contracts during the period in both its healthcare and its Industrial divisions. He said that food hygiene was a growing market and added that the firm had just signed its first deal with a company in the automotive sector.

“These new opportunities are extremely important for the Group, particularly as capital spending comes under pressure in the healthcare sector, which has traditionally been a key market,” he said.

“While the current trading shows some limited signs of a better 2011, the outlook for Proventec has been vastly improved as a result of the adoption of the Scheme of Arrangement. The Board will continue focus on driving the business forward, securing contracts and ensuring maximum shareholder value.”

Following the refinancing, the firm finished the period with net assets of £14.4m. Its debt pile has also been dramatically reduced, as more than £13m of debt was converted into shares, other debts were written off and the coupon paid on its loan notes has been reduced from 8.5% to 4% in return for the issue of more loan notes. Repayment terms have also been lengthened.

Following the restructuring, the firm has replaced former chairman Peter Teerlink with Michael Hough, who has said that he will “look to further strengthen the board in the near future”.