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Accrol – open offer update, how’s the “platform for the group to execute its strategy”?

By Steve Moore | Thursday 7 June 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.


Tissue products manufacturing group Accrol (ACRL) has updated that it received valid applications of 287.64% of the new shares available under an open offer to raise up to £1.935 million at 15p per share. That compares with a 22.5p prior close, but also more than 130p as recently as October 2017, so where now?

The noted open offer take-up will see excess applications “satisfied on a basis that takes account of their respective holdings of shares in the company as at 5.00 p.m. on 18 May 2018” - and the total of 12,901,200 new shares to be issued under the open offer will see the issued share capital to 195,246,536 shares.

That compares to 93,012,002 on June 2016, 100p per share, AIM admission, when the company emphasised “the net proceeds… will be used by the group to repay all shareholder loan notes and refinance existing debt… believe that admission will provide the business with an increased reputation and profile and the ability to incentivise key employees, as well as providing a platform for the group to execute its strategy”. It has subsequently been;

  • December 2017: placing of 36 million new shares at 50p each, raising £18 million including to “mitigate the identified short-term funding requirement” and “implement restructuring”.
  • May 2018: placing of 53,333,334 new shares at 15p each, raising £8 million including to “support the future working capital requirements of the group” and “continue the implementation of the restructuring programme to improve operational efficiencies”. This accompanied with the noted open offer.

However, that latest placing announcement still included “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” and “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”.

Hmmm. AIM admission to refinance debt, provide an increased reputation and profile, incentivise key employees and provide a platform to execute strategy hey! What price would ANOTHER bailout have to be? This thus currently remains another tale of AIM IPO shame (thanks AGAIN Zeus Capital!) on the bargepole list.


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