A raft of bad news over recent months has seen the shares dive from 245p to 60p. Mosaic's diverse interests include merchandising of cartoon characters such as Teenage Mutant Hero Turtles, and automotive products.
Pre-tax profits in the year to April fell 44 per cent to pounds 4.2m, resulting in the removal in July of Brian Disbury as chairman.
The latest problem involves preference stock held by Rodney Day. He sold Rodney Day Associates, producer of artists' impressions, to Mosaic for pounds 3.8m in 1988.
Leon Angrave, managing director, said redemption could not be honoured under Mosaic's banking facilities. 'Our facilities are sufficient for on-going trading. The problem is caused by the need for extra monies for Rodney Day,' he said.
The situation is 'serious, and needs to be resolved', he said. Negotiations over revising banking facilities are taking place with Barclays and Midland. There are only three other holders of preference stock, amounting to pounds 250,000.
Mosaic's net borrowings are about pounds 500,000, set against pro forma net assets at 30 April calculated after the pounds 12m sale of the engineering and automotive division.
Talks are also being held with Mr Day, who now operates independently in Australia, to renegotiate terms of the convertible redeemable preference stock.
Under the original terms he could serve Mosaic with two months' notice of redemption, which he did in July. The notice period expired on Monday.
The banking talks are expected to be finalised by the end of next month.
It is trading profitably but below expectations. 'Recognising the need' to conserve cash, the final dividend, which would have cost pounds 897,000, is being withdrawn.
Shareholders were due to vote tomorrow on the dividend proposal at the annual meeting. Mr Angrave said the directors had had to prepare for the possibility of a stormy meeting.Reuse content