Andrew Yates reports on the growing number of business flops which have tarnished the junior market's reputation.
First Information, the distressed CD-Rom manufacturer, has been forced to apply to the courts for an administration order as it is unable to satisfy its creditors and cannot secure new funds.
The group's collapse, comes less than two years after it joined the AIM market.
First Information was floated at 165p in March 1996 by KPMG, one of the country's largest accountancy firms. Charterhouse Tilney, the brokers, also advised on the group's entry on to AIM. The management team, lead by shareholder James Edmonds and including Michael Rodd, a former presenter of BBC's Tomorrow's World, predicted fast-growing sales of its FlagTower CD-Roms.
However, just months later the group was forced to admit that sales had fallen well short of flotation forecasts. Since then the group being battered by the slump in the demand for CD-Roms due to poor demand and intense competition.
"This flop is another embarrassment for AIM. KPMG and Charterhouse Tilney must share a lot of the responsibility for this and should hold their heads in shame," one City fund manager said. First Information's shares were suspend at 2.25p yesterday.
Rising losses has also forced Crown Products, the giftware group, to call in the receivers at Hunkydory, its UK subsidiary, putting 85 jobs under threat. Floated at 50p by Brook Corporate Finance of Birmingham in 1995, its shares have were suspended last Friday at just 1.75p.
Hunkydory had a contract with Disney to make anything from Winnie the Pooh mugs to pencil cases adorned with Beatrix Potter characters. However, under chairman Michael Hughes, Crown Products overreached itself after embarking on an acquisition spree.
The casualties are the latest in a long line of business flops which have tarnished the reputation of the junior market. Recent flotations such as Omnimedia, another CD-Rom group and Reflec, which makes reflective inks, have also been a disaster.