Last checked at 
* Firm raises doubt over ability to continue as going
concern
* Shares fall by as much as 26% to a 20-yr low
* Cuts dividend to tackle debt, speeds up restructuring
(Updates shares, adds comments, timeline)
By Yadarisa Shabong
Nov 26 (Reuters) - Banknote printer De La Rue
warned on Tuesday of "significant doubt" that it can continue as
a going concern and said it would scrap its dividend to tackle
mounting debt, sending its shares to their lowest in two
decades.
The news follows a series of setbacks, including two profit
warnings, an investigation into suspected corruption in South
Sudan and the loss of a 400 million pound ($513.20 million)
contract for Britain's new passports.
"We have concluded there is a material uncertainty that
casts significant doubt on the group's ability to continue as a
going concern," De La Rue said in a statement, adding that it
was focused on delivering a turnaround plan.
De La Rue, which appointed Clive Vacher as its chief
executive last month, said it would conduct a review of its
business that will speed up its restructuring plan to cut
overhead costs and focus on inventory management.
The over 200-year old firm, which holds the contract to
design and manufacture the Bank of England's new polymer notes,
said its net debt had risen 58% to 170.7 million pounds.
That is above the company's market capitalisation of roughly
133 million pounds at its lowest price on Tuesday.
De La Rue said dividend and pension payments and inventory
buildup due to changes in production schedules were among the
reasons for its ballooning debt. It has a 275 million pound loan
due in 2021.
Before Tuesday's announcement, De La Rue's combined credit
score - which measures how likely a company is to default in the
next year on a scale of 100 (very unlikely) to 1 (highly likely)
- was 4, Refinitiv Eikon data showed.
De La Rue also faces competition from state-run and private
firms, which has pressured its banknote printing margins, and
the increasing popularity of digital payments..
"We might have simply reached the point where De La Rue is
best positioned as part of a bigger company rather than as a
standalone entity," said Russ Mould, investment director at AJ
Bell.
UK trade union Unite called the situation "very worrying"
and said it was seeking clarification from De La Rue regarding
its future, with its chief concern being the employment of more
than 400 people at its Gateshead and Debden sites.
The company posted a half-yearly operating loss of 9.2
million pounds, compared with a profit of 10.1 million pounds a
year earlier, chiefly due to restructuring charges.
Activist fund and second biggest shareholder Crystal Amber
said it was "not alarmed" by De La Rue's weak first-half report,
and had been encouraged by Vacher's turnaround plan. It had
chosen to buy more shares, it said..
Although its adjusted operating profit plunged 87% for the
first half, De La Rue forecast it would do better in the second
half as it expects more favourable currency volumes and benefits
from cost cuts.
($1 = 0.7794 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Shounak
Dasgupta, Alexander Smith and Jan Harvey)
