Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.


Danka calls in bankers for crisis talks

DANKA BUSINESS Systems, the photocopier distributor, has started crisis talks with its bankers after issuing its third profit warning in less than a year.

Shares in Danka almost halved in value, slumping 36p to a six-year low of 44p, after the group warned that revenues in the three months to the end of September had fallen by 5 per cent on the previous quarter, possibly pulling the company into the red for the quarter. The shares peaked at 830p just over two years ago.

A second-quarter loss would leave Danka in breach of some of the covenants covering its pounds 450m debt load. The company said it had "initiated discussions" about the covenants with its bankers.

Danka also revealed that it is planning to appoint a financial adviser to conduct a broad-ranging review of its operations with the aim of "enhancing shareholder value".

Industry analysts said Danka would struggle to survive and would have to make large disposals to reduce its debt load.

The crisis stems from September 1996, when Danka paid $668m (pounds 438m) for Kodak's office imaging business. It funded the deal entirely with debt, arguing that the steady cash flows from the business would allow it to gradually pay off the loan.

However, in December Danka shocked the market with the news that it was struggling to integrate the acquisition and that its sales force in the US had been slow to adapt to a new bonus plan. The news prompted investors in the US to mount a lawsuit against Danka, accusing it of previously giving false information. A further warning followed earlier this year.

No-one from the company was available for comment. But analysts said that Mark Vaughan-Lee, the chairman, and Dan Doyle, the chief executive, were likely to come under pressure to resign before the company reports its second-quarter results in early November.