Mission pays price for over-expansion: debt restructured, chief executive and CFO leave, Bray Leino founder takes chair
The Mission Marketing Group – the AIM listed company identified as one of several with vulnerable balance sheets by Marketing Services Financial Intelligence in August 2008 – has had to renegotiate its bank facilities and the settlement of past acquisition obligations to maintain the business as a going concern.
The price of survival has been the heads of chief executive Iain Ferguson and chief financial officer Tim Alderson, although Ferguson had already intimated that he would stand down at “the appropriate time”.
David Morgan, founder of the Bray Leino subsidiary that he has sold and bought back on several occasions in the past, will assume overall responsibility for the group as executive chairman. He has a 6.85% shareholding in the group.
Alderson has been replaced on an interim basis by the former deputy CFO of Photo-Me International, Peter Fitzwilliam, and two additional non-executive directors have been appointed with financial backgrounds.
Mission lost nearly £2 million in 2009 after suffering a 17.5% fall in turnover, writing down the cost of past acquisitions by £4 million and incurring reorganisation costs of £705,000. Without those (hopefully) non-recurring costs, the group would have made a pre-tax profit of £5.6 million, representing a respectable operating profit margin of 15.4%.
But Mission’s main problem stemmed from its obligations to settle acquisition debts of about £3 million within one year at a time when additional bank funding would be required. Bank borrowings had already reached more than £20 million and finance costs alone were running at about £1.8 million per annum.
The banks have agreed to restructure their debt to remove any repayment obligations until 2011, and to meet the acquisition payments becoming due to vendors this year. As a sweetener the banks will have the right to subscribe for roughly 3% of the company’s share capital at a nominal price of 10p per share with effect from December 2012.
Mission’s shares lost a further 22% of their value following the announcement.
© Fintellect Ltd