(Alliance News) - Tricorn Group PLC on Wednesday said it has started a strategic review which may lead to a sale, as it does not have enough cash required for its turnaround plan.
Shares fell 11% to 5.35 pence in London on Wednesday afternoon. They are down 14% year-to-date.
The Malvern, Worcestershire-based tube parts manufacturer said it has "experienced an extended period of challenging markets and turbulent trading", while price inflation and shipping delays are expected to add costs.
As a result, the company's current borrowing facilities are not enough for it to make the investment required to return to profitability, Tricorn said, adding that it is currently within its facilities and its bankers remain supportive.
The board therefore has hired Arden Partners PLC to start a strategic review, with options including a formal sale process or unit disposals. Largest shareholder Roger Allsop, with a 34% stake, supports the review, the company said.
In interim results announced separately on Wednesday, Tricorn reported revenue of GBP8.3 million in the six months to March 31 - down 1.4% year-on-year from GBP8.5 million. Its pretax loss narrowed to GBP44,000 from GBP774,000. Net debt increased to GBP5.2 million from GBP3.6 million a year ago.
Customer demand is improving and volumes are returning to pre-pandemic levels, the company said.
Tricorn said it has made significant changes to its executive team, who are focused on improving operating and implementing new commercial strategies.
Former chief executive Mike Welburn stepped down in January, and was replaced by Michael Stock, who combines the role with that of finance director.
Stock had joined the company in August 2020, replacing former finance director Philip Lee. He then led an internal review in which "various matters came to light in the preparation of the group's financial statements", including a GBP3.6 million balance sheet exposure risk and GBP1.0 million inter-company imbalance.
By Ivan Edwards; ivanedwards@alliancenews.com
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