Woodford pallet company issues plea for new funding
THE Neil Woodford-backed pallets business RM2 will ask shareholders for an emergency $6m (£4.8m) cash injection later this month after failing to file its accounts before the end of June.
RM2’S Aim-listed shares were suspended at the beginning of July at 8.5p after the logistics company failed to publish its 2018 accounts on time.
Its shareholders will now be asked to approve the fundraising at a general meeting on July 31 in Luxembourg. If investors fail to back the placing, the company will move ahead with a voluntary liquidation, and delist its shares from the London Stock Exchange.
RM2 designs pallets for the logistics sector and also offers tracking and system management services.
Woodford Investment Management is the company’s largest shareholder, with 59pc or just over a third of the voting rights, giving it the power to block the potential fundraising. RM2 said it had “no assurance” that Woodford will vote in favour of the placing.
In a statement to shareholders, the board said that raising money through a placing was “the only viable option” to ensure its survival. It also said this method would avoid the requirement for a prospectus. If the placing is successful, the company said it would ensure enough shares remained in “public hands” so it could make an open offer to all shareholders in a secondary fundraising at a later date to allow them to preserve their holding.
Woodford’s stake in RM2 has fluctuated in size over time, as the company has relied on the veteran fund manager to back other rescue missions.
In March last year, Woodford’s stake doubled in size to nearly 68pc after RM2 was forced to raise $32m in two separate tranches. The company said in mid-january that a $2m cash balance would only see it through to the third week of February.
Mr Woodford is under pressure to sell holdings in listed investments as he battles to increase liquidity across his suspended equity income fund.
Trading in the fund was suspended on June 3, blocking investors’ access to their cash indefinitely.
Woodford Investment Management was contacted for comment.