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November 18, 1993


By CBR Staff Writer

Net losses up 120% to UKP19.6m saw Ferranti International Plc’s directors plead with shareholders to accept the penny-a-share rescue bid from GEC Plc. The offer was described yesterday as the only alternative to receivership as the company warned the banks would not continue to lend to it, if the offer failed. The company’s lack of ready cash has reached the point where it is affecting Ferranti’s ability to win new business: the result is a vicious circle with the weak balance sheet and falling orders orders feeding off each other. Shareholders’ funds fell 44% to UKP34.9m with turnover dropping by nearly 17% to UKP91m. Its biggest albatross is debts of UKP98m – the result of the contract fraud which hit its International Signal & Control subsidiary. Though Ferranti managed to win UKP66.2m of new business in the half year, this was insufficent to prevent a further decline in the unexecuted order book from UKP200.6m at 31 March 1993 to UKP164.8m by the end of September. During the six months intense efforts were made to seek additional capital through a strategic partnership, but these failed to materialise, as did an expected important contract in the Middle East, which could have delayed the company’s decline. In addition to the operating loss of UKP5.3m was hit by non operating charges of UKP2.4m, while setting aside UKP2.7m for legal provisions. GEC’s plan would see it assume Ferranti’s bank debts, but as Reuter points out, Ferranti’s 10 largest shareholders own 38% of the equity and the top 100 own 59%; GEC wants 90% of shareholders to accept – this equates to virtually all of its 8,000 larget shareholders. The remaining 10% is in the hands of 40,000 individual shareholders, the news agency says. A number of shareholders are aggrieved at the terms of the offer, but the message from Ferranti is that there is absolutely no prospect of anything better – it’s a penny a share or nothing.

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