TEG needs £2m after abandoning sales process
TEG Group this morning announced that it has decided to end a sale process which has been ongoing since January.
The firm had received “a significant number of preliminary expressions of interest” from potential acquirers back in January and appointed KPMG Corporate Finance to run a formal sale process.
However, it said that after considering offers, the board “did not believe a transaction could be completed in a reasonable period of time and this would lead to further shareholder uncertainty”.
The Chorley-based company, which makes anaerobic digestion plants and other green technology equipment, instead announced plans to raise £2m through an open offer to existing shareholders. Shareholders will be offered 57 ordinary shares for every 100 shares currently owed at a discounted rate of 3p per share – its shares were trading at 7.25p at close last Friday.
The company said that if it does not raise the extra cash and there are further delays to it receiving income from project revenues, the firm could be placed “in a position of significant uncertainty and the Company’s status as a going concern will require review”.
TEG Group blamed delays to receiving income from certain projects as pre-tax losses before exceptional items widened to £1.7m in 2011 (2010: £628,000 loss) and its overall revenues dropped 14% to £17.9m. However. the firm was also forced to declare exceptional losses of £6.3m. meaning its overall pre-tax loss was £8m.
The exceptional charges were due to write-downs in the carrying value of its plants at Perth in Scotland and its Sherdley Farm plant at Hutton, near Preston, which it was forced to close in 2010 after breaching environmental permits and had been unable to find another tenant for the facility since.
Despite the poor trading figures, chairman Nigel Moore said the board was “confident that the group has an exciting future with a promising outlook for trading in the remainder of 2012 and beyond.”
He argued that demands for its services remained string, and that the group had secure funding in place for projects.
“TEG maintains a strong pipeline of tender opportunities and anticipates the successful conclusion of further projects in 2012,” he added.
