Spiralling losses spell crisis for Ofex

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The Independent Online

Ofex, the fringe stock market set up in 1995 as an alternative to the London Stock Exchange, was last night fighting for survival after warning it would run out of money before the end of the year.

An emergency fund-raising put together by the company's broker, Numis, collapsed at the last minute, forcing the Ofex to admit spiralling losses and a looming cash crunch. The market - home to a range of niche or growth companies, including the football clubs Glasgow Rangers and Arsenal - was trying to patch together a new rescue package last night. The company's investors include Luke Johnson, chairman of Channel 4, who declined to comment on whether he would take part in a new fund-raising.

Mr Johnson paid £340,000 for a 6 per cent stake last December when Ofex shares were 25p. Yesterday, the stock plunged 54 per cent to 8p, valuing it at £1.7m. The company will "require additional funding in order to carry on its business in its existing state beyond the end of November", Ofex said.

Although there was a glut of flotations in the spring, all but a handful of companies chose the LSE's junior market, AIM, rather than Ofex. While AIM has enjoyed a virtuous circle of increased investor interest, making it easier to raise money and attract larger numbers of companies, Ofex has appeared locked in corresponding decline. It raised £1.7m in a flotation - ironically, on AIM - last year, but the number of firmstrading on the market has declined from 170 then to 136. Many have moved to AIM or withdrawn their shares. Ofex lost its biggest member, Weetabix, after it was taken over last year.

John Jenkins, who founded Ofex nine years ago and is its chairman, said that losses in the first half of 2004 had risen to £533,000 from £273,000 in the same period last year. He signalled last month that he plans to retire soon.