There is no `quick fix’ for troubled textile machinery maker Mackie International, according to Sol Sahota, its new chief executive.
However, he believes the company can be restored to profitability in the medium term. Sahota is putting £300,000 of his own funds into the underwriting for a £5.25m `rescue’ cash call now being made on shareholders.
It is a bold gesture as the institutional investors will take up around 40% of the issue, but private investors may be less supportive, and underwriters could be left with a big chunk of stock. Pat Dougan, Mackie’s former boss, holds 13% of the equity and is doing £1m of the underwriting.
The 20p offer price for the new shares, which capitalises Mackie at £8.5m against pro forma assets of £22m, is at a deep discount on 113.5p at which the share quote was frozen in April.
Dealings will resume on 3 July if investors approve the cash call at a special meeting on 2 July. If they do not, the bankers will withdraw from financing arrangements and the company will fail.
Along with the cash call came news of a restructuring of the textile operations, boardroom changes, and a restatement of the 1996 results revealing a loss of £7.2m against the reported £400,000 loss. Restructuring involves the loss of 60 jobs (one in every three) among the works personnel.
Former City investment analyst Sahota sees his brief as concentrating on Mackie’s core competence and doing basic things such as updating products.
He concedes Mackie’s textile machinery business has had no significant orders for some time and is working only on spares, but the natural fibres industry appears to be on the upturn.
Enquiries are pouring in about the facilities of the £14.2m foundry due to come on stream in August. Sahota expects to win work for it from Continental Europe engineers who have closed their own foundry capacity.
The company forecasts a £4m loss first half, but stockbroker Rensberg expects the loss to be halved in the second six months. There will be no dividend this year.
Manchester-based industrialist Mike McDonald who has shown an interest in acquiring Mackie, has yet to decide his stance after the announcements.