New interim chairman as Ennstone confirm bid approach
LAST week Ennstone plc appointed a new interim executive chairman following the issuing of a profits warning and the announcement of plans to accelerate the sale parts of the business, in the face of the continuing decline in construction activity.
Graham Brown, one of the company’s independent non-executive directors, has replaced company founder and former chairman Vaughan McLeod, who intends to retire in 2009 but in the meantime will assume the role of chief executive officer with responsibility for operations.
The change came as the company revealed that group profits for the year were likely to be ‘substantially’ below the expected figure of £13.5 million, following a sharp downturn in business in recent weeks, particularly in its English and Scottish businesses.
It added that as a result of the deterioration in trading, and with the industry as a whole suffering from tightening credit terms, the group’s cash position had also deteriorated.
Following the announcement, the company’s share price fell 35% to 10p.
The company confirmed that it would have to ‘extend and accelerate’ its asset disposal programme, which was originally intended to be limited to all or part of its US business, and was also actively considering an equity fund-raising in order to reduce its estimated £200 million net debt.
In a statement it said exclusive talks were already taking place with one company in relation to the sale of Ennstone’s Pennsylvania business.
Commenting on the situation, Graham Brown said: ‘Following the prolonged deterioration in the US market and recent sharp downturn in the company’s core UK market, the company acknowledges that it needs to restructure its balance sheet in response to these challenging trading conditions.
‘As such, the board is actively pursuing its strategy of asset disposals alongside an equity fund-raising in order to meet its current financing requirements.’
Late last week the company’s share price rallied by 30% after Ennstone confirmed that a preliminary approach had been made to acquire the company. However, discussions were said to be at a very early stage, with no certainty that an offer would be made.
