MDIS suspends share listing

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The Independent Online
Dealings in shares in beleaguered McDonnell Information Systems computer services group were suspended yesterday pending the results of a rescue refinancing package. MDIS is trying to raise more than pounds 20m through a placing of new shares and is expected to announce it made a loss of almost pounds 40m in 1996. It lost pounds 39.4m in 1995.

MDIS has been forced to make huge provisions to cover a host of loss- making contracts it took on several years ago. John Klein, chief executive who joined the group last year as part of a management shake-up, is desperate to draw a line under a disastrous few years for the group.

"We have thrown the kitchen sink at it. This is an attempt to create a new start for MDIS after the problems of the past," a company spokesman said.

MDIS' advisers, Close Brothers, insist that they would be able to raise enough money to save the group. "The refinancing is progressing well and the demand for shares is encouraging," said Colin Keogh, chairman of Close Brothers corporate finance yesterday.

It is thought existing shareholders could subscribe for more than half of the shares. Most of the original investors in MDIS already bailed out when the true extent of its problems came to light soon after its flotation.

One industry source suggested that many of its current shareholders only bought shares recently and are sticking by the group in the hope that the loss on their investment can be mitigated.

MDIS has been one of the worst new issues in recent years. It was floated by Barings and NatWest at 260p just over three years ago and the shares have plummeted to just 23.5p before being suspended. Its market value has slumped from pounds 260m to pounds 25m.

Last month MDIS made its fifth profit warning since it floated. It said it would make "very substantial" losses for the year to December 1996 and would have to raise money to rebuild its balance sheet and cash position. Its problems stem from taking on contracts that it was unable to service properly.