AIT rescue deal will leave shareholders with 4%

The software company AIT Group yesterday unveiled a financial rescue package that could see existing shareholders end up owning just 4 per cent of the transformed business.

The cash-strapped company, which is also planning a major cost-cutting, confirmed it would go ahead with a restructuring put forward by a group of investors including its founder and executive chairman, Richard Hicks. Under the terms of the complex deal, Mr Hicks and his team are investing £8.5m while AIT is raising another £12.5m through a share placing and rights issue.

The move will see Mr Hicks and his co-investors end up with 41.25 per cent of the company while current shareholders will own as little as 3 to 4 per cent of the group if they don't take up their allocation of shares in the rights issue. "I have great empathy with shareholders in this," Mr Hicks said, but emphasised he felt the deal was "the only way forward that has some upside for shareholders and staff".

The company's directors warned yesterday that they did not think the company would "be able to continue as a going concern" if the share placing and rights issue did not go ahead.

Mr Hicks, who currently holds around 14 per cent of the company's shares, said he would end up with around an 8 per cent stake in the business once the deal had completed.

Some of the cash being raised will go to reducing the company's £11m debt to around £6m while some has been earmarked to finance a redundancy programme which is expected to see a "substantial" reduction of its 500-strong workforce.

The move came as the company announced a pre-tax loss of £9.3m for the year to 31 March, compared with a profit of £5.1m a year before. Nicholas Randall, who has experience in turning companies around, was also appointed chief executive.

While Mr Hicks admitted that AIT's customers had delayed taking decisions in buying its software due to the uncertainty surrounding its finances, he believed the business could be turned around within a year of the restructuring.