WARRINGTON body armour specialists Shieldtech has appointed administrators just two days after its shares on the Alternative Investment Market (AIM) were suspended.
Gareth Roberts and Paul Ellison of RSM Tenon Recovery were this morning appointed to Shieldtech and its subsidiaries Aegis Engineering Holdings and Aegis Engineering.
In May Aegis Engineering was appointed as preferred supplier to at least 30 of the 53 UK police forces under a national framework agreement. However none of the series of mini-tenders under the agreement have been completed and the timing of orders “remains uncertain”.
In a statement to the stock market today, Shieldtech said: “As a result of the sustained fall in demand in the UK police market and the adverse impact on working capital, the board has recently explored several options to improve the financial position of the company and to realise value for the benefit of the group’s stakeholders.
“New invoice discounting facilities have been arranged with a major bank, to be used once the expected order flow in the UK market begins. The directors had also intended to raise additional equity finance to strengthen the balance sheet at the same time.
“These plans were frustrated, however, when the group’s bank informed the directors that it intended to place in escrow the proceeds from the recently announced Turkish order as additional security for its term loan and overdraft.
“Without access to these funds, the company’s short term working capital needs have been severely affected.
“The directors have not been able to raise additional equity funds in the short time available to them, in view of the continued uncertainty of the future order position.
“The board has continued to vigorously explore all possible options to address its short and medium term financing requirements and has been in negotiations with a number of parties, including in relation to a possible sale of the Aegis business as a going concern.
“Prior to the company’s suspension of trading in its shares, it was hopeful that sufficient additional funding or a business disposal would be completed. It has now, however, become clear that neither solution can be achieved within the foreseeable future.”
Shieldtech’s shares were at 2.5p when they were suspended, having fallen steadily over the last year from 14p in August, 2009. In late 2007, the shares had been valued at 27p.
Although the group made a small pre-tax profit of £92,000 in the year to June, 2009, it had lost £10.3m in 2008.