Torotrak issue left with backers

A pounds 50M RIGHTS issue to fund the development of a revolutionary type of car gearbox by Torotrak, the former BTG subsidiary, has flopped. Only 2.64 per cent of the shares on offer at 300p were taken up.

The money will now be provided by the institutions that had agreed to sub-underwrite the issue.

Failure was almost inevitable given that the price of Torotrak shares had gradually slipped from a 302p high to 224p on Monday. Shares fell a further 6.5p to 217.5p yesterday.

A spokesman for Torotrak said the rights issue was hampered by the 12 per cent fall in the general stock market. "Torotrak is a difficult company for investors because there is nothing quite like it. It is an engineering company with a new product being developed and more similar to a biotechnology company," he added.

BTG decided to hive off Leyland-based Torotrak so that it could concentrate on developing an Infinitely Variable Transmission, which offers 20 per cent fuel savings by dispensing with a clutch.

Torotrak had become too big for BTG's portfolio of technologies. The company was launched on the stock market as a separate entity from BTG on 27 July at a price of 250p.

The pounds 50m of new money will be spent on developing fleet trials for the new transmission system. Torotrak will not mass produce the system, but already has seven licencees with options to do so.