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Accrol – after 2016 IPO at 100p & 2017 bailout placing at 50p, what now?

By Steve Moore | Wednesday 16 May 2018

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.

In June 2016 tissue products manufacturer Accrol (ACRL) listed on AIM, raising £63.5 million at 100p per share. Just seventeen months later it was bailout fundraising at half of the IPO price but still recently “revised banking arrangements” have been necessary and now at 3:08pm on 15th May 2018

“Accrol announces a proposed placing of £8.0 million… at a price of… 15 pence per share”! This follows the company having stated only at the start of the month on revised banking arrangements that they “will help to support the growth of the business and enable the new management team to pursue the business recovery plan”. Not ‘supporting’ and ‘enabling’ for long then as this latest funding is “to continue to support the group's programme of simplification, aid its recovery and provide more working capital”!

The pricing is also a 21% discount to the prior close, though at least also “the company intends to raise up to a further £2.0 million by way of a conditional open offer”. Director participation of “c.£320k” is emphasised, but then I also note this latest bailout is to be accompanied with “a new management incentive scheme… in order to incentivise the delivery of key performance measures over the longer term”. Er, how about their salaries and potential uplifts in the value of their shares doing that?!

It is further stated “the proceeds of the placing and the open offer will enable Accrol to continue delivering on its business recovery and support its plan of becoming the leading supplier of own-label paper-based products to discounters and grocery retailers”, but then also;

“The directors believe, having taken into account the net proceeds of the placing, that the group will have sufficient working capital for its short term requirements. However, the board is unable to make any confirmations about the sufficiency of working capital beyond this due to the group's working capital being highly sensitive to, amongst other things, Parent Reel pricing, foreign exchange fluctuations, the level of turnover and the pace of progress on the group's ongoing operational restructuring. As such… not in a position to confirm that the net proceeds of the placing, together with the available bank and other facilities that will be in place following admission, will be sufficient for the group's requirements for the next 12 months.”

With also “the net debt position of the company on admission, taking into account the net proceeds of the placing of c.£7.5 million, is expected to be c.£25.5 million”, it’s enough seen – this remains another tale of AIM IPO shame (thanks AGAIN Zeus Capital!) on the bargepole list.

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