Founder pumps £19.5m into AIT to stave off collapse

The founder of the troubled software firm AIT Group along with a group of investors yesterday put forward a £19.5m rescue package in an attempt to stave off its collapse.

The company said it had received the refinancing proposal from a group of investors, led by Richard Hicks, a non-executive director and the company's founder and former chairman.

Mr Hicks and his team plan to inject £8.5m into the company while a further £11m will be raised through a rights issue, to be fully underwritten by Old Mutual Securities.

The company said it believed the proposed fundraising, coupled with an agreement with its clearing banker, would be "sufficient to secure AIT's medium and long term future and would preserve AIT's position as an independent company".

On that basis, it said it believed the refinancing package, which is subject to approval, was in the best interests of all existing shareholders and stakeholders.

As part of the deal, shares in the company, which were suspended from trading on the London Stock Exchange last month, will be moved on to the Alternative Investment Market.

AIT also said yesterday that Mr Hicks would replace Carl Rigby as executive chairman immediately. Mr Rigby will stay on as chief executive.

The company, which put itself up for sale last month after admitting to a severe cash crunch, said yesterday that it had met with "a number" of interested parties.

"No offers have been received that warrant further consideration," it said. Under the terms of the refinancing deal, the £8.5m interim loan finance will either be repaid and replaced with shares or converted fully into shares.

"This proposal would provide significant immediate interim loan finance which should be sufficient to secure AIT's short-term future," the company said.

It said it was working to progress the plan "as rapidly as possible" and would post documents to shareholders and call an extraordinary general meeting to gain approval.

At the end of May, AIT issued a shock profits warning and revealed that its directors had to loan the business £700,000 to keep it going. It said then that a key contract had not yet been confirmed and that there would be a £1.1m shortfall in profits and revenue. It also said it had become aware that its short-term cash requirements would not be covered by its borrowing facilities.

It followed that warning up with last month's statement, when it put itself up for sale and delayed the publication of its year to 31 March results.