Bottom Line: Fenner's godfather

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The Independent Online
CONFUSED and disillusioned shareholders in Fenner, the Hull-based engineer, have found a fairy godfather in the shape of ESIH, a North American group of investors with a taste for long- term, supportive investment in medium-sized European manufacturers.

ESIH is providing money and management, commodities that have been in short supply at Fenner for some time.

They are subscribing a minimum of pounds 1.9m for a 5 per cent stake in Fenner at a 5 per cent premium to the market price and underwriting, at no charge, one third of a pounds 17.4m, one-for- two rights issue, priced at a tight 6 per cent discount.

Fenner investors, shorn of dividends after an expected attributable loss of pounds 3.4m in the year to 31 August, decided that if ESIH was happy after a due diligence search then so were they. Fenner's share price responded with a 14p jump to 100p.

Fenner shares have ridden the switchback of two abortive takeover discussions in the past year and big changes at the top this summer. ESIH may sound too good to be true.

But if power transmission can be sold for pounds 20m or more, clearing out debt, the rest of Fenner could generate margins of 12 per cent on sales of pounds 100m and earnings of up to 10p.

A possible dividend of 2.5p in 1993/4 for a yield of 3 per cent forms a solid base for progress.