Davenham attempts to shut out takeover threat
ASSET lending firm Davenham has announced that it has entered into exclusive talks with its largest shareholder, Kingswood Property Finance and Moor Park Capital Partners about a potential reconstruction of the business.
The restructuring would involve Manchester-based Davenham taking on external funding “which would enable one or more of its divisions to recommence writing new business”.
Davenham’s board issued a statement to the stock exchange yesterday afternoon stating that it had secured agreement from its banking syndicate for a standstill on its current loans which are repayable on demand and are due for renegotiation next month until it became clear whether a deal with Kingswood and Moor Park can be worked out. Its exclusivity period will last until March 31.
Davenham is currently winding down its loan book, which was last valued at around £90m when the company published figures in November, when it owed its RBS-led banking syndicate £110m.
The board also reiterated its earlier statement that even if a restructuring were worked out, it was likely that there is no value left in the company for shareholders – a position it has maintained since the results of a review conducted by Hawkpoint Partners was completed in June last year.
Paul Burke, Davenham’s group managing director, said: “Whilst there can be no certainty as to the outcome of these discussions, we are pleased to have the support of the banking syndicate to enable more detailed discussions with Kingswood and Moor Park Capital regarding a potential recommencement of writing new business.
“In light of the exclusivity granted to Kingswood and Moor Park Capital, the board is working intensively with them to try to maximise the chances of a reconstruction proposal being formally proposed by Kingswood and Moor Park Capital to the banking syndicate.”
Both Burke and current chairman James Kerr-Muir are facing a move by rebel shareholders to oust them at a second EGM which is due to take place in Manchester next month following an earlier failed attempt in January.
The second general meeting was called by Manchester-born entrepreneur Tony Murtagh, who is calling for shareholders to back a plan to install former Hitachi Capital CEO David Anthony and ex-Secure Trust Bank CEO Gary Jennison as its new chairman and chief executive respectively.
Anthony told TheBusinessDesk.com that he saw no reason why shareholders who had planned to vote for a change of board should now change their mind.
“They continue to affirm that current shareholders will get nothing, so it beats me why they think any more shareholders will support them.
“If the EGM resolutions are carried there is at least a prospect of returns for the shareholders,” he said. “If Gary and I are elected, we will attempt to bring the negotiation with the banking syndicate to a satisfactory conclusion.”
