Foundry group shareholders to vote on investment to stave off insolvency
Chamberlin, the specialist castings and engineering group, is urging shareholders to back a £200,000 investment in the business which has recently lost two major contracts.
The Walsall group is holding a general meeting on March 8 at its Chuckery Road offices, but shareholders will not be able to attend in person.
Chamberlin hopes the investment from Trevor Brown will secure its near-term future and prevent potential insolvency.
Mr Brown has three decades of experience of investing in real estate and equities. The funding has been advanced by way of an unsecured convertible loan note instrument, resulting in him being issued with £200,000 notes, which will convert into 3.33 million shares.
He will also be appointed as a non-executive director of Chamberlin.
Due to the Covid-19 situation, the directors have taken the decision that voting on the resolutions at the general meeting will be taken on a poll, rather than a show of hands, to ensure that shareholders' proxy votes are recognised.
Mr Brown has worked as a director in a number of businesses over many years and is currently chief executive of IQ-AI and Braveheart Investment Group.
As part of his appointment to the Chamberlin board, he has agreed to explore with the board all potential options of further funding to help stabilise the short-to-medium term working capital requirements of the company.
It is hoped that after the deal and a future fundraising, the company will be in a position with its auditors to be able to publish its annual audited accounts for the year to March 31, and the interim results for the six months to September 30, 2020, which should result in the current suspension of trading of the existing ordinary shares on AIM being lifted by the London Stock Exchange.
The group has three subsidiaries: Chamberlin & Hill Castings in Walsall; Russell Ductile Castings, Scunthorpe and industrial lighting business Petrel, Walsall.
The board has been rigorously investigating the possibility of new equity capital and alternative measures to ensure the company's future.
Chamberlin said in a statement: “Unless the resolutions are passed by shareholders at the general meeting, not only can the conversion not take place nor can any future equity fundraising. If this were to happen, the directors believe that this would prejudicially impact the already limited funding options available to them and should the company fail to obtain further funds in the short term, the directors believe the company will be unable to continue trading as a going concern.
“In addition, unless the resolutions are passed by shareholders at the general meeting, the company is expected to be unable to comply with one or more financial covenants that are in place under the terms of its existing facilities with its lending banks.
“In such circumstances, if the company is unable to reach agreement on alternative arrangements with its lending banks and other creditors (including HM Revenue & Customs), then this could lead to enforcement action over all or part of the group’s assets including executing a disposal of such assets. In the event that the resolutions are not passed, the directors would likely seek to place the company into some form of insolvency proceeding, or a creditor may take action to enforce or initiate an insolvency proceeding. Any such proceeding would be likely to result in little or no value for shareholders.
“Accordingly it is important that shareholders vote in favour of all of the resolutions so that the conversion may proceed and all funding options are available to the board.”
Trading in the group’s shares was suspended at the beginning of January.
