LONDON (Alliance News) - Bagir Group Ltd, the formal wear tailoring company which listed on AIM just last month, Thursday saw its valuation tumble by over half after warning that it had been hit by an unexpected reduction in orders from its largest customer and was talking with its lenders about getting a waiver on its banking covenants.
The company, which raised GBP20.0 million in its initial public offering on April 15, said it had experienced an unexpected reduction in the volume of purchase orders and a reduction in margins on retained revenue from its largest customer, mainly for the fourth quarter of year.
At the time of its IPO, Bagir had said its largest UK customer was Marks & Spencer PLC. A Bagir spokesman Thursday declined to comment on the identity of the customer that reduced its orders.
"The company also notes that there can now be no certainty that the customer's previous order patterns with the company will be sustained," Bagir said in a statement.
It said it now expects revenue in 2014 to be about USD100 million to USD104 million and earnings before interest, tax, depreciation and amortisation to be USD4 million to USD6 million. Revenue was USD99.5 million and Ebitda was USD6.1 million in 2013.
"Accordingly, the company has commenced the process of obtaining a waiver from its debt providers regarding its banking covenants," it said.
Bagir said it will cut costs and restructure in response to the set-back. It is also looking to secure new business with other existing customers and source new business elesewhere to try and offset the loss from its largest customer, "but at this stage the outcome of these actions cannot be certain".
"Clearly the reduction in purchase orders and the reduction in margins on revenue is a major disappointment, however the company plans to take the necessary actions to help mitigate these issues," Bagir Chief Executive Danny Taragan said.
Bagir last month said it would use proceeds from its IPO to repay bank loans of USD9.0million and invoice factoring credit of approximately USD7.0 million and invest in its Ethiopian production facility and its IT and R&D departments.
Its shares were down 68% at 20.25 pence Thursday morning. It had listed at 56 pence.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
Copyright 2014 Alliance News Limited. All Rights Reserved.
