In one year, the loss has turned net assets of pounds 12.3m into a pounds 12.2m deficit. Bimec yesterday warned its shareholders the proposed refinancing was critical for its survival.
'The group . . . has effectively lost its share capital and reserves,' Bimec said. 'If the proposed refinancing arrangements and proposed disposal do not proceed, the directors have resolved to invite Lloyds Bank to appoint a receiver.'
Bimec owes Lloyds about pounds 17m, almost all on its overdraft. Lloyds has agreed to write off pounds 5m of the debt, to convert pounds 3m into preference shares and to convert a further pounds 500,000 into ordinary shares.
Bimec will repay another pounds 7.5m by selling its aero engineering activities and two of its core water treatment businesses to EIS, the acquisitive process equipment and precision engineering group.
Shareholders, which include Friends Provident, must back these plans at a meeting next month - their only hope of obtaining any value from their investment, Bimec said.
After running down and selling its remaining air conditioning and electrical contracting businesses, Bimec will be left with three water and waste companies: Biomechanics Environmental, Dewey Waters and Three Star Engineering. Lloyds has agreed to provide a five-year interest-free loan of up to pounds 4.9m.
Bimec will then have about 300 employees and turnover of pounds 25m- pounds 30m. It ended its year to March 1992 with 2,000 employees and sales of pounds 103m.
Roy Barber, the company doctor who replaced Sam Smith as Bimec's chairman last September, said the group had turned out to be in a far worse state than he had imagined last November, when he reported an interim pre-tax loss of pounds 7.9m.
Biomechanics, previously highly regarded, was in serious difficulties and suffered losses of pounds 4.8m, some of this relating to prior years.
Bimec incurred nearly pounds 7m of closure and reorganisation costs, pushing the group to a pre-tax loss of pounds 14.8m. But in addition Mr Barber has written off a further pounds 10.95m to cover the overstatement of past profits.
This includes pounds 1.5m for a research and development write-off, pounds 4.4m on the overvaluation of long-term contracts, pounds 2.4m on a Burnley property and pounds 1.5m on stock-keeping problems.
Mr Barber is already suing Grant Thornton, Bimec's former auditors, over the stock-keeping deficiencies at Cornercroft Engineering, a Coventry firm he closed last November. Mr Barber is considering widening the legal action to embrace other concerns. He said it was not worth pursuing claims against Bimec's former directors.
The two water businesses EIS is buying are Eta Process Plant ('an excellent company', according to Mr Barber) and Plastic Constructions Fabrications. Including the aero engineering firms, the companies being sold had turnover last year of pounds 24m and lost pounds 3.2m.
Bottom Line, page 33
(Photograph omitted)Reuse content