Troubled Eatonfield in new shareholder cash plea

CASH-strapped property developer Eatonfield has been forced to call a general meeting to stop it entering administration, after revealing directors are unable to draw down the cash needed for working capital without shareholder consent.

Last week, the Cheshire company said an equity drawdown facility arranged with joint venture partner Jenard Properties Limited to provide working capital for the struggling group will now run out in mid-July, six weeks sooner than expected, because one of its banks had imposed onerous lending terms.

So far it has drawn down a total of £600,000, with £650,000 still available under the facility, to be used at any time until August 31.

However, it has now revealed that to release any more cash it will require shareholder consent to allot a sufficient number of ordinary shares to satisfy the drawdown of the full amount of the facility.

The company has called a general meeting, explaining in a circular to shareholders that if they do not consent the company will be forced to cease trading and could fall into administration.

The letter from executive chairman Paul Williams said: “The directors are confident that additional equity funding will be made available to the company.

“If shareholders do not approve the resolutions, the directors will not be able to draw down the remaining funds available under the facility and there is likely to be a shortfall in funding and it is possible that the company would be required to cease trading shortly after the general meeting and enter into administration. Accordingly, it is extremely important that shareholders vote in favour of the resolutions.”

The group gave no update on whether it had agreed standstill agreements with its banks, after breaching loan covenants. The general meeting will be held on May 28 at the company’s offices in Tarporley.