Plans revealed on Valentine’s Day to sell engineering firm Hampson Industries got off to a less than romantic start when its share price plunged.
Brierley Hill-based aerospace engineer Hampson, which has almost £55 million of debt and has been trying to refinance its bank facilities, has put itself up for sale,
However, its share price – which has dropped about 89 per cent in the last year – has halved in the last week, falling below four pence, after plans for the sale were announced.
Stephen Jones, head of the Birmingham office of Brewin Dolphin, said it was sad that a Midland manufacturing stalwart found itself in this position.
He said the firm had been left with too much debt after a series of recent transactions overseen by former financial director Howard Kimberley and former chief executive Kim Ward in recent years.
He said: “The management team has effectively destroyed value for shareholders with what I would call a not ill thought out but very badly executed serious of transactions that have left Hampson with an unmanageable amount of debt.
“One of the decent businesses is Shims and that has been sold and was bought by the old financial director.”
He added: “It think it is very sad that a long-established West Midlands name that has been around for years has come to his.
“I think everyone had hoped that the Kimberley and Ward management team would create something of substance but that wasn’t the case and now they have got a US management team that wants to get rid.
“The fact that the share price has taken a tumble since the announcement suggests there is not going to be a lot of value for shareholders.”
Hampson, which makes tools used in the production of the F-35 Joint Strike Fighter, has appointed DC Advisory Partners and Sagent Advisors to conduct a sale process.
The firm’s share price fell by 3.4 pence to 4.35 pence in early trading after the sale was announced, and then sank below 3.9 pence on January 15.
The decline was caused not only by news of the sale process, but a setback “during the testing and customer approval process” for Hampson’s largest tooling order. Hampson said this has pushed some deliveries back and it was “assessing” the impact on profits.
Despite selling its Shims businesses for £51.5 million last year, the group still has a net debt of £54.9 million.
The tooling delays have resulted in an increase in working capital and borrowings, which the board said is expected to continue in the short term.
In a statement, the group said it continued to focus on refinancing its bank facilities, however, the board believed it prudent to review all financing and strategic options for the company, including the sale of the business.
“The group continues to focus on refinancing its bank facilities,” the statement said.
“The board of Hampson also believes it to be prudent to review actively all financing and strategic options, including a sale of the group and is therefore announcing the commencement of a formal sale process.”
The group has been involved with two legal disputes in the past year. It was forced to pay £1.5 million in a legal settlement after a judge deemed a £3.1 million deal to sell ailing car parts firm Erlson Precision Holdings was “fraudulent”.
However, its balance sheet received a £1.6 million boost last December when it reached a settlement over a long-running dispute with the former owners of two American firms it bought after it accused them of “misappropriating and treating as their own private property”
* Shares in Hampson Industries were worth 3.9p at close of trading on January 15.