Romag Holdings Share Discussion Threads

[future financier] 25/3/2011 12:05

I met JK a couple of times - a really nice decent bloke and certainly no crook. I suspect he did this because he was afraid of the effect the hole in the accounts would have on the share price - and the fact that this could leave Lyn's executors having to pay Inheritance Tax that was greater than the value of the shares in ROM that she owned.

VERY VERY SAD.

I don't own but had been contemplating doing so until personal circumstances meant I needed the money elsewhere.

Hopefully ROM's fortunes (and mine!) will improve.

[battlebus2] 22/3/2011 21:08

Maybe the Kinnear family will take this private again. Really strange set of circumstances.

[masurenguy] 22/3/2011 11:17

Quite possibly - if LBG were going to call in their facility then it would only be as a last resort after all other avenues had been explored and not yielded any positive options. They won't want to take a write down until or unless they have to do so !

[honiton] 22/3/2011 10:43

Or LBG are supportive because they have not called in any facility.

Asset sale at knockdown price and only asset is really the IP.

IMOH, DYOR

[masurenguy] 22/3/2011 08:43

"The Company has been considering with its advisers its strategic options in conjunction with its bank, Lloyds Banking Group ("LBG") and has appointed Deloitte to assist. LBG remain supportive of the business.!

My interpretation of that particular comment is that they are also exploring the possibilities of finding a 'White Knight' to takeover the business !

[honiton] 22/3/2011 07:48

ho hum....suspension still on...

[masurenguy] 16/2/2011 08:00

neilrr, I have to agree with you where the FD is concerned - if he didn't know about the source of the £4m then how can he have any credibility ! He has been FD for at least 4 years so it is not as though the loaned or gifted money was already in place prior to his arrival there.

I guess that with no new CEO, and John Kennair being compromised, the NXD's needed to support the only remaining executive director that was left, especially since they are still in critical negotiations for new debt facilities with Lloyds, which are essential for their survival. It's a sad situation but I did highlight the potential financial problem with regard to their debt facilities some 5 months ago.



I think that the failure to appoint a new CEO quickly to address the debt and inventory issues was a big mistake. However, had they done so, their is no guarantee that a new CEO would have been able to resolve them. I can't see how they can attract a new CEO without first obtaining new debt facilities and the bank may be reluctant to provide this without a new CEO who might inspire some confidence for the future so it could be a Catch 22 scenario. Maybe John Kennair might be prepared to provide some more personal collateral to support an element of new debt finance that will tip the balance with Lloyds !

It's a real mess ! Although I have no current position here, I hope that somehow they can find a viable financial solution since it would be very sad to see them go under.

[honiton] 09/2/2011 20:56

quite but:-

what would the accounts have been like if the money had not been gifted?
has the gift created a false market in the shares?
why did the FD not notice?
why was the Board not told about it at the time/and why were investors not told?
has the loan meant that John K had undue influence over commercial practices (I don't think this for one moment but it's a question that has to be asked)
what is the status of the gift? is it a loan or a pure gift? does it have to be repaid. thinking aloud: John K could say its a gift but, if he was to pass away suddenly, what would his executors and beneficiaries of any estate believe? is there any case law??
was any documentation incorrect? would think its difficult to pay money to a company and not declare/state who it is coming from?
is there any false accounting?
where is the money coming from to pay for the investigation and what will be the drain on management time?
how will the new funders feel about it?

sorry, to sound so negative but if I was a customer/supplier/investor/employee I would think the same and think twice before having dealings with ROMAG. After all there are other PV glass companies in the world.

[9degrees] 08/2/2011 22:53

I am not sure why you think this ? He has paid in this money as a gift not a loan - Surely this must be good news ? It is only the circumstances that cause the problem and the fact there may be other issues involved - But on the face of it it cannot be a reason to sell the company ?

[eisler] 08/2/2011 10:32

Yes - looks like the end is nigh, very sad indeed

[happyjackal] 07/2/2011 20:09

So very sad. A great British manufacturing and technology company will now likely get sold off for a song. So very sad.

[garth] 04/2/2011 23:55

Suspended....sell...?????

[masurenguy] 04/2/2011 18:15

ROMAG (LON:ROM, 35.5p – suspended, £17.76m) An update on the reason for suspension has reported John Kennair, Chairman, paid into the group £3.97m during the second half to avoid a write-down of outstanding trade receivables. While he has no connection to the parties involved it was executed without the board's knowledge. We are surprised to learn that, although John Kennair has stepped down as Chairman, he will remain as CEO. The board has also indicated its confidence in David Banks, the FD, despite he was not aware of the payment - though it will strengthen the operation with a new financial controller. In a trading update the group is seeing strong demand, especially for the added value solar panels. Suspension only builds selling pressure - we maintain the Sell recommendation that was in place before the suspension. As the group has commissioned a full review of the transactions and corporate governance. Suspended –SELL (Julian Tolley)

[masurenguy] 04/2/2011 07:55

Kennair has apparently been manipulating the finances to try and keep the company solvent. Steps down as Chairman but will continue as interim CEO ! Very odd and rather concerning that the CFO apparently had no knowledge of what was going on. How is this possible when it involved circa £4m. How will the bank view this in relation to the effectiveness of existing financial controls during current negotiation to renew and extend banking facilities !

Will now start the process to recruit a CEO - why have they waited so long ? Negotiations with the bank over a renewal of facilities remain ongoing - this escapade, plus the delay in recruiting a new CEO, is hardly likely to be helpul to this process.

BoD has responded quickly to the above revelations but is it too late in the day ?
___________________________________________________________________

RNS Number : 6762A
Romag Holdings PLC
04 February 2011

Suspension of Trading, Revised Governance Arrangements, Banking and Current Trading

Background

On 31 January 2011, the Board of Directors of Romag were informed by John Kennair, Chairman of the Company, that, during the second half of the year ended 30 September 2010, he paid £3.97 million into the Company's operating subsidiary, Romag Limited, to avoid a write down of outstanding trade receivables, which at the time he believed was in the best interests of the Company. Unfortunately these payments were made without being disclosed to the Board. John Kennair has informed the Board that he has no connection with these trade parties and that no debt or other obligation is outstanding to him from the Company or its subsidiary.

Suspension of trading

Following this disclosure on Monday 31 January 2011, the Board informed their nominated advisor, who on their behalf requested the immediate suspension of trading in the Company's shares.

Independent review

The Company's non-executive directors are now in the process of commissioning a full investigation into the transactions undertaken along with an independent review of the Company's accounts, which will include the Company's corporate governance procedures and any non compliance with relevant rules and regulations. This investigation will be undertaken by a major accountancy firm.

Future corporate governance arrangements

John Kennair has stepped down as Chairman with immediate effect but, with the full backing of the Board, remains Chief Executive responsible for the day to day running of the Company and a main board director. Non-executive director, David Gray, a chartered accountant with considerable listed company experience, has been appointed as Chairman of the Company and will be supported by the senior independent non-executive director, Peter Allan, who also becomes Deputy Chairman.

The Board will now commence the recruitment of a Group Chief Executive, a main board appointment, and John Kennair has agreed to remain with the Company in an operational capacity to ensure a smooth handover.

The Board is confident that David Banks, Finance Director, was unaware of the transactions now to be investigated and has full confidence in his actions. It is the Board's intention to further strengthen the reporting function of the Company with the appointment of a new financial controller.

The Board also intends to appoint a further independent non-executive director to strengthen the Company's corporate governance, systems and controls.

Banking arrangements

On 28 January 2011, the Company announced that it was in negotiations with its lender, Lloyds Banking Group ("LBG") to provide amended banking facilities and had received a conditional offer of new debt facilities from LBG. This conditional offer is the subject of ongoing negotiation between the Company and LBG who remain actively engaged in an open and constructive dialogue with the Company.

Current trading

Romag is a specialist manufacturer of transparent composites to the security, renewable energy, architectural and specialist transport markets. The Company is currently experiencing significant demand for its products, particularly in the high growth area of solar panels, supported as they are by the UK's highly beneficial renewable energy feed-in-tariff ("FiT") regime. Romag's market positioning is resulting in high levels of customer enquiries and a significant forward order book.

Further announcements

The Board will make a further announcement as soon as possible.

[masurenguy] 01/2/2011 07:29

Undisclosed payment sparks Romag suspension
Mon 31 January 2011

Shares in Romag Holdings have been suspended following the discovery of a payment to the company by its executive chairman John Kennair. The share price had already fallen by 5.5p to 35.5p by the time that the shares in the AIM-quoted specialist glass manufacturer were suspended at 3.55pm. Altium replaced Arbuthnot as the company's nominated adviser and broker last week and it was notified of the payment today. The board admits that it should have disclosed the payment earlier. The non-executives are commissioning an investigation into the transaction and corporate governance.

Kennair owns nearly 12% of Romag, which has found trading tough in the past year and it has had to write down £6m from its balance sheet, which relates to stock and intangible assets. There have also been problems with a supplier of photovoltaic cells. Net debt was still reduced by £2.2m in the year to September 2010, from £18.5m at the end of the previous financial year. Last week, Romag said that it had received a conditional offer of new debt facilities from Lloyds Banking Group. The terms have yet to be finalised but it is expected that they will include a commitment fee and an increase in the overall cost of the company's borrowings going forward on an annualised basis. The figures for the year to September 2010 were going to be published when the refinancing was secured.

[honiton] 01/2/2011 06:49

shares non execs. with ZYT....

[eisler] 31/1/2011 22:53

Christ - was sorely tempted a week or so ago to invest - sincere sympathy to all current holders...

[mattjos] 31/1/2011 22:19

it's 'twin' has done 50% too :-)

[masurenguy] 31/1/2011 21:38

Hi Matt - sadly, prospects are looking rather dismal here. Still, on a much lighter note, I see you've now doubled your money with your punt on Cyan - good for you ! :o)

[mattjos] 31/1/2011 19:43

traded this last year for a good gain. forgotten all about it until today. What a mess! salt & pepper being mixed up it appears .. they should have made a clean breast of all this ages ago rather than try to wing-it .... they are v exposed right now to a vulture. one to watch more closely now i feel.

Hello Mas!

[mudbath] 31/1/2011 18:52

For those frustrated "solar"investors,try PUR;not without its own problems,yet imo a most interesting investment.

[masurenguy] 31/1/2011 17:06

Masurenguy - 6 Sep'10 - 955: There are a number of issues that urgently need to be addressed here and until they are the share price is likely to continue to drift down. 1. Following the sad death of Lyn Miles in June they need to appoint a new CEO. The company needs strong leadership to tackle its current challenges ! 2. They need to announce the extent of the inventory write downs. 3. They need to look at their financial arrangements because it appears that they are getting close to the ceiling on their debt facilities. 4. They need to issue a further trading statement covering points 2 & 3 above plus a range indication of the likely year end loss. This cannot wait until the December results since markets hates uncertainty and the share price will be punished further until some tangible information is provided. We are now close to the all time share price low of 31.5p in March last year when directors bought 225K shares @31.75p. I took profits and sold out at 62p last December but would not consider buying back in until the above issues have been resolved.

floppyhat - 6 Sep'10 - 958: Nah. Priced-in, baby. It's all priced in. Romag are only going to make a technical loss for the year. They were barely a hundred grand up for the first six months, anyway, so any bottlenecks were bound to take them into the red. Customers with credit trouble will pay up eventually, the component suppliers will fulfill their obligations eventually, and the inventory write-down is a giant clue that the infant market for photovoltaic glass is getting more affordable by the day.

mudbath - 9 Sep'10 - 962: Masurenguy suggests that ROM have little or no headroom in their banking facilities. If such a problem were to evidence itself,then we might see a particularly sharp sell off.

frogkid - 9 Sep'10 - 966: I'm with Masurenguy. Have held these on and off for a few years and done OK but I was caught out by that profit warning. Some say they come in threes. I would not add any until debt, finance etc is cleared up.

Hate to say it but these problems were raised 4 months ago. They clearly have serious cashflow issues

"As previously announced, following exceptional costs of approximately GBP6 million in relation to the confirmed write down of stock announced on 4 October 2010 and the impairment of intangible assets notified on 7 December 2010, Romag will report a loss for the period ended 30 September 2010.....Subsequent to the exceptional costs incurred during 2010 the Company has entered into negotiations with its current lender to provide amended banking facilities. The Company has now received a conditional offer of new debt facilities from LBG which it is in the process of negotiating the final terms of and the bank remains supportive of the Company. At this stage the terms have yet to be finalised but it is expected that they will include a commitment fee and an increase in the overall cost of the Company's borrowings going forward on an annualised basis. The Company has today appointed Altium Capital Limited as its Nominated Adviser and Broker to assist in the negotiations with LBG and with our ongoing relationship with equity investors.

Why suddenly switch Nomad from Arbuthnot to Altium at this late stage in their negotiations with the bank, especially when they acknowledge that part of the reason is to "assist" with refinancing negotiations. This implies that Arbuthnot either couldn't help them get the deal that they needed or didn't believe that a viable deal was possible. The RNS on Friday would not have been required if the negotiations with LBG were a done deal. As we all all know, bank lending is still very restricted particularly to small companies who are carrying existing debt.

The year end results are also late - they're supposed to be published within 3 months of the year end (Dec 31st) as has been the case over the past 4 years. This delay suggests that there could be also be "audit" and "going concern" issues that may have delayed the final accounts being signed off in the absence of the conclusion of the regnegotiation of bank finance facilities. The second RNS stating that "various matters should have been disclosed at an earlier date" does not inspire confidence either. Could John Kennair have been moving cash around to keep the bank happy and creditors at bay ?

Furthermore they have not replaced Lyn Miles either, some 7 months after her sad demise, at a critical time where the company really needed some strong and effective leadership.

This does look very ominous to me but I really hope for the sake of remaining shareholders that they can somehow find a satisfactory resolution to these financial issues !

[pugugly] 31/1/2011 16:26

So the Chairman pays some money to the company and they suspend the shares – Very odd. Suggests to me they were possibly about to breach their banking covenants (charitable interpretation), so why not say it was a temporary loan or possibly he had been paid to much and was repaying – but if so why not state that.

I suppose we will have to wait to find out but a worry to all holders.