TANFIELD (LON:TAN) Open Offer to raise £2m – it doesn’t look enough to us!
The beleaguered engineering group has announced an open offer to all shareholders of 20 million new ordinary shares to raise up to £2m before costs (which shouldn’t be high). The issue price of 10p per share represents a 31% discount to the closing price on 7th September 2010) and equates to the issue of one new share for approximately every 3.7 existing shares. As I write the share price stands at 14p, with the shares off only 3.45% so the news has actually been quite well received.
Over 90% of Open Offer is underwritten by some of the Directors and Institutional Investors so it’s clearly in the bag. The severity of the crisis at Tanfield is evident from the Directors provision of a £750,000 standby loan facility in the interim. We commented previously in our blog on 26th August (‘Tanfield – will private investors save the day?’) suggesting that a much larger raise (c£7m) was necessary to give Tanfield a stronger hand at the negotiating table. Given the Directors commitment perhaps management know different and consider that they are on the cusp of concluding satisfactory negotiations. Let’s…