The board of Wordplex Information Systems Plc yesterday detailed its long-awaited proposals aimed at putting the company back on a sound financial footing. At an extraordinary meeting next month, it will ask shareholders for permission to implement a UKP12m refinancing package that nearly trebles the number of shares in issue and gives Octagon Industries Ltd […]
The board of Wordplex Information Systems Plc yesterday detailed its long-awaited proposals aimed at putting the company back on a sound financial footing. At an extraordinary meeting next month, it will ask shareholders for permission to implement a UKP12m refinancing package that nearly trebles the number of shares in issue and gives Octagon Industries Ltd a central role in the running of the company. The package, drawn up in conjunction with Octagon founder Geoff Bristow, who has been acting as chief executive over recent weeks, is designed to reduce gearing from its current level of 270%, and to strengthen senior management. The UKP12m will be raised by a mixture of a placing arranged by Close Investment Management Ltd – 7.2m shares at 50p each – and an 11 for 10 rights issue of new 50p shares to raise UKP5.7m, with a consortium of banks subscribing for UKP3m of 7% cumulative redeemable preference shares at UKP1 each. Under the plan, Jeremy Thomas, currently at Racal Electronics but with 11 years experience of office automation at ICL and DEC where he spent one year as head of the All-In-One product development division in the US, will become chief executive with Bristow moving to deputy chairman until September when he will succeed chairman John Heywood. In addition, Wordplex will also be able to call on the help of four other Octagon directors: former ICL chief executive Dr Robb Wilmot; Dr Alex Reid, ex-chairman of Acorn Computers Plc; Kingsley Meek and Jonathan Thornton, when the need arises. Announcing the results for the year to December 31, Bristow said that 1986, while difficult, also saw considerable progress. Despite a poor second quarter during which sales of Wordplex’s System 8000 text processing system came to a virtual standstill as a result of loss of confidence, sales for the year were up 5% and an operating profit of UKP50,000, compared with a 1985 loss of UKP2.7m, was made. Pre-tax losses in the second half fell to UKP187,000 compared with UKP4m in the same period last year and net working capital was reduced by approximately UKP3.7m. However, another UKP2.3m – UKP1m for inventory, UKP1m towards the closing of overseas subsidiaries in Sweden and the US and UKP200,000 to terminate directors contracts – was written off, bringing the total of losses over the last two years to over UKP10m. On the face of it, Wordplex shares reacted unfavourably to the refinancing, down first thing by 25p to 100p but the shares rallied later to 116p and with the rights issue on the way are currently looking a strong buy in expectation of a decent recovery under the new team, even though 1987 started with supply problems caused by a major sub-contractor.