The big winners and losers in roller-coaster world of junior markets

STOCK MARKET WEEK

The backers of the City's two junior share markets must be pleased with themselves. AIM and Ofex have suffered only occasional hiccups and avoided the run of disasters predicted in so many quarters.

Of course, the two markets are chalk and cheese. AIM, or the Alternative Investment Market, is the creation of the Stock Exchange; Ofex is the brainchild of an old-fashioned, highly experienced jobber, John Jenkins.

They evolved from the demise of two Stock Exchange-sponsored markets. AIM was seen as the successor to the old and for a long time successful Unlisted Securities Market and Ofex appeared because of a decision to axe the old 4.2 matched bargains market.

It could be argued that Brussels influences killed the USM and the Stock Exchange was merely making the best of a bad job by introducing AIM as a replacement.

After a hesitant start, with a handful of constituents, it blossomed beyond the belief of even its greatest supporters and is nudging around 300 stocks. It has also remained free from any large calamity.

This month Greenhills, a restaurant group, acquired the dubious distinction of being its first casualty although the whereabouts of Firecrest, which lost its listing when its two sponsors retired, must be causing anxiety among its shareholders.

The last word was Firecrest could be the subject of a take-over bid from a US group with a share-trading facility.

Firecrest, which is in such glamorous activities as multi-media and Internet products, packed more into its brief, bizarre AIM existence than many fully quoted shares manage in decades.

It was boom and bust, with the shares enjoying a volatile existence. The roller-coaster ride went from extremes of 37p to 200p. Just how much any takeover bid will be worth must be a matter of conjecture. There has even been talk of 330p a share.

A number of other AIM companies are suspended but there seem reasonable hopes the shares will return to market, although shareholder dilution looks likely.

The successes of the junior market include Abacus Recruitment, Surrey Free Inns and Pan Andean Resources.

Abacus is standing at an 84.5p peak after a dramatic profits recovery. It was founded as an accountancy agency but has spread into such activities as providing catering staff.

Surrey Free Inns, at a 412p peak, has scored a hit with its Litten Tree superpubs concept. It is seen as vulnerable to a takeover strike, with Regent Inns and Yates Brothers Wine Lodges the mostly likely predators.

Pan Andean, despite the shock of a dry well which the world and its dog had regarded as a surefire success, can still muster a ride from 17.5p to 51.5p. Mind you, when the excitement over its Bolivian involvement was at its peak, the shares soared to 135.5p.

The big successes on Ofex include Display IT Holdings, which has produced a rival to the Reuters financial screens, Motion Media, with video telephones, and Robotic Technology, with robot grinding systems.

It is not surprising that such a lightly regulated market has suffered a few highly forgettable experiences. SkyNet, supplying vehicle information systems, had an unbelievable run - and that is exactly what it turned out to be.

The shares romped from 27.5p to 275p when it was about to move to AIM. But then the AIM move failed to materialise as questions were asked about the rampant Ofex share price. Ofex then decided to suspend the shares.

The AIM float was geared to raising pounds 2m. The company has since made a pounds 2m debenture issue and drawn down pounds 900,000. It is now talking about further cash-raising which will involve a rights issue and another debenture.

Services Direct is another Ofex casualty. Joint administrators have put together a rescue package for the skin care group. The shares remain suspended at 60p.

Woodstock, a pubs and restaurants group, is also suspended. It was floated by stockbroker Austin Friars Securities at 20p in July when it pulled in pounds 600,000. The company then consisted of around 45 pubs and a pub restaurant, the Blenheim at St John's Wood in London.

In November the shares, down to 15p, were suspended. Woodstock's board, it was stated, had "recently become aware of certain financial irregularities" within its Kingston Inn offshoot. Then came the bombshell. Woodstock said Kingston had defaulted on its obligations to Bass, the brewing giant, which had put in a receiver. The restaurant arm, it was stated, continued to trade satisfactorily. Group chairman Richard Flatau resigned.

The company promised a "further detailed announcement in the very near future prior to a resumption in the trading of the shares".

For a business to run into such problems so quickly after its Ofex launch must be of considerable concern to Mr Jenkins and his team. The Ofex contingent and sponsors Austin Friars Securities may also care to ponder that investors who supported the flotation have yet to hear a word directly from Woodstock.

The announcements chronicling the problems have been made on the Ofex screen and through newspapers, such as The Independent. It is time the company explained itself to shareholders who, among other things, remain unaware of the identity of the new chairman, whether anything will be salvaged from the Kingston problems, what impact they will have on the other part of the group and how such a disaster can overwhelm a company so quickly after professionals have pored over its prospectus figures.

Let's hope Ofex and Austin Friars Securities insist Woodstock writes to shareholders soon. It would be a pity if a few poor performers are allowed to tarnish a market which is well run and serves the useful purpose of providing a share trading facility for many firms the Exchange choses to ignore.

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