Good morning! The big small cap news this morning is an update from Silverdell (LON:SID). The shares were completely unexpectedly suspended on 2 July, pending clarification of the group's financial position - which is nearly always code that the company is bust.
It just didn't stack up in this case, and indeed on 3 Jul, after doing my research, I commented here as follows:
... It appears that there has been some sort of disastrous sequence of events concerning a Winding-Up Petition for a fairly trivial amount of money, which appears to have triggered much bigger problems with the Bank and/or the Court in some way, and has resulted in a subsidiary of Silverdell, Kitson's being put into Administration.
We don't know what will happen next, but it sounds to me as if there's some chance that the situation could be salvageable. We'll have to wait & see what their next announcement says.
Whilst almost all other (bulletin board) commentators had written the company's obituary, and mulled over why investors had been foolish to buy the shares, It now looks as if my reading of things was correct! The situation does appear to have been salvaged, as the company has belatedly issued a statement this morning indicating that:
The Board is pleased to confirm that discussions with the Group's bankers, HSBC, have reached a satisfactory outcome. HSBC has confirmed that it remains supportive of the business and will be providing additional short term facilities to the Group.
The Board also confirms that Kitsons is the only Group company which is in administration, and that all other Group companies continue to trade as normal.
So the most likely next steps are that there will be a more detailed explanation, and the shares should be restored to trading, and in all likelihood will open substantially lower. I suspect there will need to be an equity fund-raising fairly soon too, because Silverdell had a stretched Balance Sheet to start with, and after all these shenanigans it is vital that they strengthen their finances to help restore confidence.
We also need to know what the hell went wrong, who is going to take the blame for it, and what they have done to ensure nothing like this ever happens again.
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