Interactive Telephone Services, a company that used to be chaired by the former arts minister Tim Renton, is negotiating with its creditors and founders about a possible financial restructuring.
According to City sources, the company is short of cash and is discussing ways of injecting new funds into it. Talks are said to be currently taking place with a variety of City institutions.
ITS was set up by the entrepreneur Nicholas Scarr and his cousin Anthony Tait. According to its last set of full accounts to June 1994, the company lost pounds 3.9m on turnover of pounds 2.3m. Shareholders' funds were pounds 1.5m. The company's shares were traded until early autumn on London's Rule 4.2 market. That market has since closed and the company has not indicated what it is planning to do.
"The company was always going to be loss-making but the losses were greater than originally expected," said a City source.
Mr Scarr said the board did not want to make any comment. The former minister became involved in July 1992. He resigned as chairman in July 1994, stating that this was the result of a policy difference over the future direction of the companies. At the time he remained a shareholder of the group.
The company has attracted controversy over the years, especially when it emerged in 1994 that it was making around pounds 12,500 a day out of handling telephone calls connected with the Rwanda emergency appeal.
Opposition MPs demanded urgent action, claiming that, although the company's actions fell within Charity Commission guidelines most people would be appalled to learn that firms could make such profits.
The charities involved in the appeal, said that using a commericial phone company was the only way to ensure all potential income was collected.
Also that year the company had to suspend a telephone game offering a monthly top prize of pounds 250,000 after suggestions that it was running an illegal lottery. The company was eventually fined pounds 750 and ordered to pay costs of pounds 7,500.Reuse content