Accident Exchange to delist shares after refinancing in effort to cut debt by £63m
Thursday 02 September 2010
The Accident Exchange, the troubled provider of courtesy cars to crash victims, is heading for a future as a private company after announcing plans yesterday to delist its shares as part of a refinancing deal with its bankers.
The company, whose shares have dropped 67 per cent this week, said it would end its four-year run on the London Stock Exchange following the crisis talks with Morgan Stanley.
Morgan Stanley has agreed to extend a £40m credit facility for three years on the condition that a separate tranche of debt that was due to convert to Accident Exchange shares in 2013 would convert immediately.
The deal, supported by 93 per cent of the convertible debt-holders, will see existing shareholders' stakes "significantly diluted", the company said. The share conversion will also give overwhelming control to just five institutional shareholders, triggering a delisting. Under Stock Exchange rules at least 25 per cent of a company's shares must be held by "public" shareholders, which are those with stakes smaller than 5 per cent. Investors will also have to approve the delisting and new equity at general meetings. A spokesman for Accident Exchange said existing investors would have the option of selling their stakes before the delisting or rolling them into the private company.
The refinancing, which has been agreed in principle, will cut Accident Exchange's debt by £63.3m and "should at least ensure its survival", according to Roger Hardman, an analyst at Hardman & Co.
In its stock market update, Accident Exchange said it continued to trade with Morgan Stanley's support and had delayed reporting its full-year 2010 results, saying it could not finalise its accounts until the refinancing was complete.
The proposed delisting comes at the end of a torrid period for the group, which earns money by renting cars to insurance companies to provide as replacements for policyholders' vehicles damaged in accidents. Last July its founder and chief executive, Steve Evans, blamed a "perfect storm" of falling values for its fleet of replacement vehicles and lower revenues from insurance companies for a £55m pre-tax loss.
It subsequently became embroiled in a legal dispute with Autofocus, a company that compares the prices charged by replacement vehicle providers, which Accident Group said caused insurers to delay settling their bills.
Accident Group, whose shares peaked at 505p in early 2006, closed down 7 per cent at 3.27p yesterday, valuing the company at £7m.
Mr Evans, a former police officer, holds 45 per cent of the shares while Lord Young of Graffham, a former Accident Exchange chairman and Tory MP, holds 4 per cent.
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