The Birmingham-based firm asked the London Stock Exchange to suspend its shares on Christmas Eve after it admitted that its accounts had failed to reflect a $18m (pounds 11.2m) claim from a customer. The group said it would give an update to investors "as soon as practicable", a move which is expected to come after Wednesday, when the stock market reopens for trading after the Christmas break.
The revelations of the accounting black hole resulted in the abrupt resignation of Richard Carr, TransTec's chief executive, and Bill Jeffrey, a director and former finance director. The company also said that it had started negotiations on the "orderly sale" of all group trading subsidiaries after discussions with its major lenders, including HSBC, the investment bank.
It is understood that HSBC is demanding repayment of its loans, which total about pounds 70m, and is unwilling to extend new facilities following the disclosure of the accounting irregularities.
About $12m of the total $18m claim was paid to one of the group's US customers in 1998, with $8.8m charged to the company's profit and loss account and $3.2m recorded as a "tooling expenditure". But $6m remains unsettled and has never been recorded in the accounts. There is speculation that the charges may relate to faulty goods supplied or a failure to meet a production target. TransTec's board is being advised by PricewaterhouseCoopers, the accountancy firm, to determine whether previous years' accounts will have to be revised in the light of the revelations. David Heathcoat-Amory, the shadow chief secretary to the Treasury, has called on the Department of Trade and Industry to launch a public inquiry.
TransTec said it expected to sell its automotive component subsidiaries, which generate more than 80 per cent of the group's turnover, in the new year. The company, which also has operations in plastics, rubber products, sophisticated controls and laser systems, has been suffering from mounting debt problems this year.
The proposed disposal is expected to cause substantial job losses among TransTec's 4,000 workers, who are based in the UK, Spain and Australia. The company has already shed more than 780 jobs since last autumn, blaming weak market conditions.
TransTec's board said: "Discussions have already commenced with potential purchasers of certain of the group's subsidiaries." The disposal programme is unlikely to benefit shareholders, with proceeds being used to repay bank debt.
In September, the group announced that it had made a loss of pounds 5.7m in the first half of the financial year, while its debts had grown to pounds 66m. TransTec shares, which were suspended from trading at 6.5p, have slumped from a peak of 121p in 1996.
Mr Robinson, who owns a 16 per cent stake in the company, has seen the value of his investment crumble from pounds 36m two years ago to pounds 1.9m today.
Mr Robinson, who is the Labour MP for Coventry North-West, set up Transfer Technology in 1976. He remained with the company until 1997, negotiating its takeover by Robert Maxwell, who absorbed the firm into his Central and Sheerwood business and renamed the enlarged group TransTec.
Mr Robinson quit his role as chairman to join the Treasury but resigned from the Government last year after revelations that he had loaned pounds 373,000 to Peter Mandelson, the former Minister Without Portfolio who, after a brief spell out of office, recently rejoined the Cabinet as Northern Ireland Secretary.
Among TransTec's institutional shareholders are Mercury Asset Management, Newton Investment Management and Schroder Investment Management.Reuse content