Bimec faces probe over cancelled dividend

THE STOCK Exchange plans to investigate why Bimec Industries changed its mind about paying a dividend yesterday, just five weeks after announcing the planned pounds 900,000 payout.

Bimec shares collapsed from 19p to 3p after it said it would not after all pay the final dividend of 0.83p. They later recovered to 6 1/4 p. Earlier this year they were trading as high as 77 1/2 p.

Sam Smith, chairman and chief executive of the fast-growing industrial concern, broke the news to shareholders at the annual meeting. He said the company needed to conserve cash.

Bimec, whose activities include environmental engineering and waste treatment equipment, said in a statement that negotiations to sell its aero and industrial technology division had fallen through at the 11th hour.

Also, business conditions facing the entire group had deteriorated sharply in the first few months of the new financial year.

The Stock Exchange is understood to be curious as to how the outlook for the group could have worsened dramatically in so short a period.

Mr Smith said the aero division was still for sale. Bimec was now in exploratory talks with three interested parties, but it would be months rather than weeks before any deal might be done.

Banks, led by Lloyds, continued to provide ongoing facilities for normal working capital requirements, a Bimec statement said. Gearing at the year-end was 60 per cent and is thought to have risen steeply since then.

No directors have bought or sold Bimec shares since the results announcement on 7 July, according to Stock Exchange records. Bernard Wheeler, a non-executive director, exercised an option to buy 171,000 shares at 20.2p shortly before.

Three directors of a new Bimec acquisition, Pearl Contracts (Holdings) - Ian Herman, Nigel Bird and Bob Newton - subscribed this week for 400,000 new Bimec shares at 25p, according to submissions lodged with the Stock Exchange.

Mr Bird, the Pearl finance director, said he had not known Bimec was going to reverse its dividend decision when he bought the shares, but added: 'We have confidence in the long-term future of Bimec. We are quite happy with our investment.'

By aggressive acquisition Bimec has grown in five years from a pounds 250,000 turnover company to one with sales of more than pounds 100m. Last year it raised pounds 10.5m with a rights issue at 47p.