Invensys shares hit by warning on cash-raising plan

Invensys, the struggling engineering and electronics group, yesterday dealt another blow to investors' confidence by warning that it could run out of cash by next June if it failed to complete its sweeping programme of disposals.

Shares in the company slumped as much as 15 per cent on the warning, which was included in a circular to shareholders concerning the disposal of its metering business.

Invensys had net debts of £1.6bn at the end of March, and must repay £515m by next June.

It said in its circular: "If the disposal programme announced on 15 April does not generate sufficient proceeds to pay down the revolving credit facility, the group would require additional sources of working capital."

City observers said the details of the statement, which were published on Invensys' website after initial reports about a possible cash crunch circulated in the market, did not give fresh cause for concern. Invensys' shares partly recovered during the day, closing down 10 per cent to 17.75p.

Analysts said the negative statement was still unwelcome in the context of the flow of bad news from Invensys in recent months. Peter Reilly at Deutsche Bank said: "The shares fell because of the uncertainty about Invensys in the market in general."

Invensys has badly shaken the nerves of the City this year with a string of profits warnings. Its shares, which have plummeted from a high of 388p in 1998, took another knocking last week when the group, formed from a merger between BTR and Siebe, adopted a more cautious approach to how much cash it expected to raise from the latest round of disposals which Rick Haythornthwaite, its chief executive, embarked on in April. The company said it could still raise "in excess" of £1.8bn, having previously said proceeds could be "substantially in excess" of that sum.

Yesterday, the company insisted it remained "very confident" it would find buyers for the remaining businesses it wants to sell. In addition to the metering business, which is being sold for $650m (£382m) to a private-equity-backed group, Invensys has put its appliance control, climate control, and power equipment operations up for sale.

Invensys said its warningwas just a stipulation required by the UK Listing Authority.