Loo roll firm seeking to raise up to £10m through new shares
Blackburn toilet paper manufacturer Accrol has announced plans to raise £8m and up to a further £2m as part of its turnaround plans.
Earlier this month it managed to agree new lending terms to avoid breaching covenants.
The firm also issued a trading update today in which directors confirm that they continue to expect that Accrol’s underlying EBITDA for the year ended April 30, 2018 will be in line with market expectations.
The directors said they are looking forward with confidence to the new financial year.
On an adjusted basis, the business is expected to return to profitability by the end of the first half of financial year 2019, with the impact of the restructuring programme expected to deliver positive financial results in the second half of the same year.
The net debt position of the company, taking into account the net proceeds of the placing of around £7.5m, is expected to be approximately £25.5m.
Executive chairman Dan Wright said today: “Accrol’s turnaround is gathering momentum and the new executive team appreciates the support of our shareholders in backing our plan through this fundraising.
“The recovery is underpinned by simplifying the business, in this way re-establishing our low-cost advantage to reinforce our market leading position.
“We are confident that our vision to re-build and grow Accrol, as the leading supplier of own-label paper products to major discounters and grocery retailers, is fully on track.”
Accrol is a leading tissue converter and supplier of toilet rolls, kitchen rolls and facial tissues as well as other tissue products to the UK’s largest retailers.
It plans a placing of £8m shares, offered to certain qualifying investors by Manchester-based Zeus Capital acting as sole broker in connection with the placing.
The directors intend to use the proceeds of the placing to continue the implementation of the restructuring programme to improve operational efficiencies; support the future working capital requirements of the group; and pay the costs associated with the placing.
In addition, the AIM-listed company intends to raise up to a further £2m by way of a conditional open offer to shareholders.
Shareholder approval will be sought in respect of the authorities required to issue the placing shares and the open offer shares at a general meeting on May 31, at the Manchester office of Addleshaw Goddard, which is advising the company on its placing and open offers.
The group has been impacted by three major issues: an escalation in internal costs; input costs; and adverse foreign exchange hedging.
However, it says it has been, and is continuing to make important progress in terms of improving operational efficiency, winning new business and pricing.
The directors believe that, by building on the group’s strong customer portfolio, the business can become the leading supplier of own-label paper-based products to discounters and grocery retailers.
