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Campari crashes as rescue is called off

Campari International, the sports and leisure clothing group, is to go into liquidation after failing to complete a pounds 4m-pounds 5m refinancing. The decision was made at a board meeting on Monday after three potential backers pulled out at the eleventh hour.

With little or nothing likely to be salvaged for shareholders, Wing Tai, the Hong Kong family company which owns just under 30 per cent of the company, is likely to face a loss of around pounds 8m. Paul Sanderson, chairman of Sanderson Electronics, also faces substantial losses, having bought into the company in November 1994. He controls a 23.4 per cent stake. The shares were suspended yesterday at 28p.

Campari chalked up losses of pounds 8.61m in 1993 and pounds 7.69m in 1994. Pelham Allen, the company doctor brought in as chairman last year, said they had been unable to obtain sufficient working capital to finance autumn and winter orders.

Shareholders' funds have fallen to pounds 4m from pounds 22m in December 1992. "Basically, pounds 8m was knocked off in each of the next two years from losses. The business needs pounds 8m-pounds 10m of shareholders' funds to support the business and we could not achieve that," Mr Allen said.

Earlier this month, Campari announced that a private UK textile company had made a proposal involving the provision of additional working capital. However, that company had now come to the conclusion that Campari's requirements were too great.

Mr Allen said they had come "very, very close" to bringing in the new backers. But he added: "Textiles is not a popular sector. We are a turnaround situation. We had stopped the losses, but had been unable to reduce the risk to get the new money in."

The group was given a stay of execution last year when shareholders, including Wing Tai and Mr Sanderson, backed a pounds 1m emergency financing package following a six-month suspension of the shares and a boardroom clear-out.

Mr Allen said discussions were now taking place with a possible buyer in Holland.