Verity Group announces refinancing rescue package

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The Independent Online
VERITY Group, the USM-quoted electronics producer, has been saved by a pounds 5.9m refinancing package following deep-rooted problems at its Wharfedale Loudspeakers division, writes Topaz Amoore.

Tomei, a large Hong Kong specialist manufacturer and distributor of electronic and audio equipment, is injecting pounds 1m of the total into Verity.

With demand for stand-alone speakers falling, Tomei hopes to broaden the Wharfedale product range to include complete audio systems distributed through high street retailers such as Dixons and Rumbelows.

It already distributes the group's Mission loudspeakers, aimed at the high-quality hi-fi market, in Hong Kong and plans to extend operations into China and Macau.

Verity made pre-tax losses of pounds 2.9m in the year to June 1992 and warned of further losses not exceeding pounds 4.25m in the financial period which ended last month.

Borrowings were unacceptably high but the proceeds of the deal should lower gearing to 34 per cent from more than 100 per cent.

Verity had hoped that last October's refinancing, when it raised pounds 5m via a placing and open offer to buy Centralforce Holdings for pounds 4m, would be sufficient to sort out its problems.

Yesterday it admitted that the latest refinancing was necessary to secure its future because it had incurred further restructuring costs since October.

A general placing and open offer of shares at 6.5p by Close Brothers will raise pounds 4.9m, of which pounds 1.8m will be subscribed by Verity's management team. Bank of Scotland is subscribing pounds 1.5m for preference shares in a wholly-owned subsidiary which will be used to reduce group borrowings.

Verity plans to apply for full listing on the Stock Exchange. Yesterday the shares were unchanged at 7p.