Simon clears way for reconstruction: Heavy exceptional write-offs leave engineer with pounds 160m loss
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Your support makes all the difference.NEW management at Simon Engineering, the group best known for manufacturing hydraulic fire rescue equipment, has prepared the ground for a financial reconstruction with results showing a pre-tax loss of pounds 160m.
Maurice Dixson, the chief executive, accompanied the financial clear-out with plans to hold a rights issue to raise pounds 50m. Mr Dixson said rights cash was required to keep Simon's syndicate of 20 banks from forcing a fire sale of assets to secure repayment of their loans.
Timing and detail of the cash call are yet to be decided but the money raised should reduce gearing below 50 per cent.
More than pounds 140m of the pounds 160m pre-tax loss was incurred in one-off exceptional items. A write-off of goodwill on business to be sold accounted for pounds 90m - much of which relates to Simon's pounds 52m purchase of Robertson Group, the oil exploration group, in 1991.
Also on the list of exceptional items is pounds 7.5m to cover the cost of professional fees relating to the refinancing. Simon also has to pay pounds 7.3m in early redemption penalties to pay back dollars 125m of US loan notes.
A further pounds 11m loss was incurred writing off the value of goodwill on businesses already sold and another pounds 5m taken to reduce the value of property assets.
However, Mr Dixson said that former executives, who quit the group last year following the company's fall from grace, will not receive compensation payments for loss of office.
Operating losses were pounds 6.8m compared with profits last time of pounds 7.4m. Mr Dixson said he was confident that new banking arrangements would be put in place. He said Simon had reached agreement with all the 20 lenders involved, but the lenders had still to confirm inter-creditor details.
He said: 'Discussions are at an advanced stage but the nature of the group's funding arrangements and its present financial position mean that these negotiations are extremely complex and will require further time to resolve. With new credit and bonding facilities in place and the proposed rights issue, the board is confident that the foundations will be in place for a profitable and cash-generative business.'
The core businesses are Simon Access, which makes the hydraulic lifting machinery, its chemicals storage division and Simon-Carves, the plant-designing and project- management side.
Simon Petroleum Technology, which includes Robertson, will be sold. Mr Dixson said the rights issue, to be held within a month, gave the company space to secure a satisfactory price for SPT.
No dividend will be paid in lieu of 1993. The loss per share is 163p, compared with a loss of 3p last time.
Bottom Line, page 28
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