It is hoped that the rights issue will raise £22m. But in a statement, Redstone admitted that there was ‘no certainty that current negotiations will lead to a successful completion’.
Once valued at over a billion pounds, Redstone, which is audited by mid-tier firm PKF, has been forced to heavily discount the price of its share in the rights issue, after the company’s stock fell by 75% in the last three weeks to just 5p, valuing the company at just Pounds 6.8m. In February the stock peaked at 949p, giving Redstone a market cap of Pounds 1.1bn.
The company is due to make a ‘detailed announcement of any fundraising plans’ when it publishes its preliminary results for the year ended 31 March 2001, in the ‘next few days’.
At last glance, Redstone’s share price had fallen 3.25p a further 30%, valuing the company at under Pounds 5m.
Reports in today’s FT suggested that chief executive Graham Cove was set to become the fifth director in less than four months to resign from the company. A spokesperson for the company declined to comment on the matter.
In May FD Alan Harrold departed to be replaced by Andrew Walsh, operations and finance director of Fastnet, Redstone’s data subsidiary.
Harrold resigned following a board meeting a few days earlier where the decision was taken to clarify a trading and financial update release relating to cash reserves, which immediately led to a 24% drop in the company’s share price.
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