Verson to expand despite loss

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The Independent Online
VERSON International, a manufacturer of presses and other metal-working equipment, is to spend an initial pounds 7.2m ( pounds 14m) on a US acquisition, despite plunging to a pounds 16.6m loss and the threat of a possible 'going concern' qualification from its auditors.

The purchase of Niagara Machine and Tool Works of Buffalo, New York, is to be financed by a complicated series of transactions. These include using a dollars 3m surplus in its US pension fund to buy 11 million Verson shares for its employee share ownership plan at 9p each - double yesterday's closing mid-market price of 4 1/2 .

Tim Kelleher, Verson's chairman, suggested the company's auditors might not have to qualify the accounts once the Niagara and other deals were completed. However, Arthur Andersen will be reporting on Verson's balance sheet as at 31 January, seven months before the deals are due to be completed. At that time, bank debts of pounds 29m outweighed net assets of pounds 12.5m and orders had slumped by more than 55 per cent to pounds 24.9m in the previous six months.

Verson has arranged additional borrowing of dollars 15m from Marine Midland, a subsidiary of Hongkong and Shanghai Banking Corporation.

Verson will receive a further dollars 7.5m from a subsidiary of C Itoh, the Japanese group, for modifying a licence agreement that covers the sale of parts for Verson presses. Verson is also to form a joint venture with Itoh's subsidiary, Enprotech Mechanical Services.

A further pounds 4m will come from selling Denton & Anderson, which owns the Taylor-Winfield welding equipment company, to John Anderson, a former Verson director.

Verson's pre-tax losses deteriorated from pounds 390,000 to pounds 12.2m in the year to 31 January. The closure of a Scottish welding equipment firm and a small press manufacturer produced a pounds 4.5m extraordinary cost to produce a retained loss of pounds 16.6m.