Manufacturer puts itself up for sale after running out of cash for turnaround plan
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The board at Worcestershire-based tubing manufacturer Tricorn is set to put the company up for sale after admitting it doesn’t have enough cash to implement a turnaround plan.
The listed Malvern company, which last month revealed there had been a “breakdown in the control and oversight of the finance function” during 2020, has this morning (July 21) said that it has appointed Arden Partners to find a buyer.
In a statement, Tricorn said: “It is anticipated that the impact of COVID-19, the significant incidence of material inflation and the shipping delays of imported material will continue to put pressure on operating costs and margins in the near term. While the group is currently operating within its borrowing facilities, the near term reduction in profitability and the increased pressure on working capital mean that these facilities alone will not provide the group with the necessary cash to make the required investment to deliver the turnaround strategy and return the group to profitable cash generation.
“In light of these matters, the board has now determined to undertake a review of the strategic options open to it in order to maximise value for shareholders. These options include, but are not limited to, a sale of the company which will be conducted under the framework of a formal sale process in accordance with the Takeover Code, or the sale of one or more of the company’s operations.”
The company’s largest shareholder, Roger Allsop, non-executive director, who has a shareholding of approximately 34.23%, has indicated his support for the move.
Last month, Tricorn announced that it had slipped to a loss of £7m for the 18 month period to 30 September.
The Malvern firm announced the appointment of Michael Stock as group finance director, replacing Phillip Lee who had been with the companyfor 11 years. Stock joined the group on 3 August 2020 and, following a review of the capabilities of the finance team, determined the need to hire a “new, stronger and more experienced” team. Under his leadership, this new team conducted an internal review of the performance of the group and “various matters” came to light in the preparation of the group’s financial statements for the period.
Tricorn has described the failure to keep proper financial statements during this time as “extremely disappointing” and has posted a loss before tax for the period of £7.7m.
The company says its performance for the extended accounting period was “significantly” impacted by the pandemic.