Torotrak: 8.09am Financial Update - Uh-Oh, Admin beckons

By Nigel Somerville | Tuesday 28 November 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Main market listed Torotrak (TRK) has issued an emergency update RNS this morning, issued at 8.09am. In short, it is in trouble.

The company states that as previously notified the company’s ability to trade as a going concern depends on being able to realise value from its assets of seek alternative sources of funding. The company has been actively seeking to restructure the Group….no final transactions have been concluded. Oh dear, that doesn’t sound good.

But it gets worse:

 on 27 November 2017, the Company received notice from Mr Jonathan Hilton and Mr Douglas Cross demanding immediate repayment of £1,746,171.73 

Needless to say, the company tells us that it disputes the legitimacy of this notice requiring repayment of a loan note, but

 the uncertainty created by this loan note redemption notice has led to uncertainty surrounding the refinancing discussions.

In other words it doesn’t seem to matter whether Messrs Hilton and Cross are right or wrong – if the company can’t or won’t pay then the refinancing looks to be all off.

And just to make it clear:

In the absence of a successful resolution of the refinancing position and/or the dispute with Mr Hilton and Mr Cross, the Company will have to consider appointing administrators.

The company tells us that in the light of the above:

it is highly unlikely that the Board will be in a position to publish its half year results for the six months ended 30 September 2017 by 30 November 2017

Right, so no interims this week, then.

The amazing thing is that the shares have not been suspended, so shareholders still have a chance to get out with whatever cheapo Tesco Value bag of crisps they can muster. With the shares down by 27% last seen, on a spread as wide as a bus (0.101p – 0.15p) perhaps it is just the crumbs at the bottom of the bag but anyone who has ignored Steve Moore’s comments (see HERE) may want to think again now, as the warning could not be clearer.

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