Chamberlin facing insolvency unless £200,000 investment agreed by shareholders
Chamberlin, the Walsall-based castings and engineering group, has revealed a £200,000 investment that it hopes will secure its near-term future – and is urging shareholders to back the deal, or watch the company face an uncertain future.
The cash injection has been made by Trevor Brown who has three decades of experience of investing in real estate and equities. The funding has been advanced by way of an unsecured convertible loan note instrument, resulting in Trevor Brown being issued with £200,000 notes, which will convert into 3.33 million shares. Brown will also be appointed as a non-executive director of Chamberlin.
The company has called a general meeting to vote on the move, but the firm’s board has barred shareholders from attending.
In a statement, Chamberlin said: “Unless the resolutions are passed by shareholders at the general meeting, not only can the conversion not take place nor can any future equity fundraising. If this were to happen, the directors believe that this would prejudicially impact the already limited funding options available to them and should the company fail to obtain further funds in the short term, the directors believe the company will be unable to continue trading as a going concern.
“In addition, unless the resolutions are passed by shareholders at the general Meeting, the company is expected to be unable to comply with one or more financial covenants that are in place under the terms of its existing facilities with its lending banks.
“In such circumstances, if the company is unable to reach agreement on alternative arrangements with its lending banks and other creditors (including HM Revenue & Customs), then this could lead to enforcement action over all or part of the group’s assets including executing a disposal of such assets. In the event that the resolutions are not passed, the directors would likely seek to place the company into some form of insolvency proceeding, or a creditor may take action to enforce or initiate an insolvency proceeding. Any such proceeding would be likely to result in little or no value for shareholders.
“Accordingly it is important that shareholders vote in favour of all of the resolutions so that the conversion may proceed and all funding options are available to the board.”
Chamberlin says it is “continuing to explore all other funding possibilities”. Trading in the firm’s shares was suspended at the beginning of January.