Minorplanet wobbles on warning of need for rescue fund-raising

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The Independent Online

Shares in the technology company Minorplanet Systems slumped by a third yesterday after it warned it needed to raise more money and was considering a rights issue.

The Leeds-based company said it needed the extra cash not only to fund the rest of a cost-cutting programme but also to provide working capital and to allow it to invest in new products.

The stock plunged 33.33 per cent, or 25.5p, to close at 51p after it sounded the alarm and also announced weaker-than-expected first-quarter sales.

The company sells technology which allows fleet operators to monitor and record a vehicle's position and speed as well as the distance it has travelled.

Minorplanet will spend the next couple of weeks deciding precisely how much cash it needs to raise and how it will go about it. All options are said to be on the table, including a loan and a rights issue.

The company noted, however, that GE and other "significant" shareholders - said to include Fidelity and Invesco - had indicated that they would "in principle" be supportive of an issue. GE owns about 17 per cent of the business and also has a representative on the board.

But Minorplanet also had some grim news on trading yesterday. While sales grew 8 per cent in the first quarter to 30 November compared with the previous quarter, that was below the 10 per cent growth that City analysts were looking for.

The announcement is the latest piece of bad news for the company, which has not only undergone a serious board reshuffle but which has also been carrying out an extensive cost-cutting programme.

The company's founder and chief executive, Jeffrey Morris, who is in his late 40s, announced his retirement in May, after apparently conceding that a "different style of management" was needed to take the business forward.

Rob Kelly, the group's finance director, was promoted into the top spot. He carried out a review of the business and has been implementing the cost-cutting programme. The company is hoping to cut overheads by at least £6m a year by the end of the year, having already managed to strip out £4m of costs.

Minorplanet also said yesterday that its franchise sales in both Spain and France had been below expectations in the first quarter of the year. It said, however, that it was in discussions with a "potential new partner" who was looking at investing in the French operation and who would also help with product development.

At the end of November, net debt had crept up to £21.8m from £20m at the end of August.

One City source said yesterday: "Larger shareholders are confident they will raise the money ... and they have got people they can go to if they need to for a loan. They and their advisers will be deciding over the Christmas period which is the best way to go. There's no doubt they will get the money."