ADSL is dead in Europe to!!
Redstone to issue 2bn shares at 1p each in rescue attempt
By Francesco Guerrera and Gautam Malkani in London
Published: June 21 2001 20:20GMT | Last Updated: June 21 2001 20:56GMT
Redstone Telecom is finalising plans for a rescue fundraising that would see it issue at least 2bn shares - more than British Telecommunications' record rights issue - at just 1p each.
The placing and offer, expected to be announced in a few days, is likely to be followed by the departure of Graham Cove, chief executive.
The telecoms operator, which has enough cash for a year, had to cut the price of its deeply discounted issue after its share price fell more than 75 per cent in three weeks. The shares closed unchanged yesterday at 5¾p, valuing the company at £6.7m. They peaked at 949p in February last year, when Redstone had a stock market value of £1.1bn.
At 1p a share, Redstone, which services small and medium-sized businesses, will have to issue more than 2bn to raise the funds it needs. It has about 115m shares in issue.
Some shareholders feel they have little choice but to support the company, which has £11m ($15.4m) of cash left.
Redstone has had to scale back business plans because of a rapid deterioration in the funding climate for telecoms companies. The company and Peel Hunt, its advisers, declined to comment.
Mr Cove, who became chief executive last year, would be the fifth director to leave in four months. Alan Harrold, the finance director, resigned in May following clarifications of statements on Redstone's financial position.
The fundraising will require a capital restructuring because the new shares will be below the nominal value of the old ones. Shareholders will have to vote on the restructuring at a special meeting. |
