Investors in AIM listed SDI Group Plc (LON:SDIG) reacted with dismay to news today that the materials handling company was in talks over a possible management buy-out priced at 2.6p per share. The company's share price plummeted by more than 40% to 2p in trading, down from a heady 12 month high of 12p last summer. SDI's independent directors Mark McMenemy, Steve Butler and Richard Arkle, said they had been approached by a consortium comprising a number of the existing management team headed by chief executive, Gordon Smith.
In a statement, the independent directors insisted that there was no certainty of a deal being done and that they were now assessing the options for the company. In it, they said: "The independent directors note that trading conditions over the past two years have proven to be very difficult and cash resources remain constrained. Accordingly, the company will be assessing alternative options to the approach from management in order to maximise value for shareholders and ensure the company has sufficient working capital to meet its needs. This may include discussions with other potential bidders." The statement also said the review would aim to reach a conclusion within one month in order to minimise disruption to business operations.
SDI designs, builds and supports integrated materials handling systems for retail, wholesale, fulfilment and e-commerce distribution customers. In a trading statement in March the company said it had been hit by a number of contract delays since the start of the year, with revenues and profits inevitably rolling into next year. It was also hit by a series of one-off costs totalling £1.1m and said it was not expecting any major improvement in market conditions in the next trading year.
Shocking disdain for shareholders that the same directors can float the company three years ago for 49p, take a wage for three years, and now attempt to buy it back for 2.6p.
As at 30-Sep-09, SDIG had no debt and £3.9m in cash and cash equivalents (which has more than likely dropped given the last trading statement), but this represented 3.5p per share, so the bid is quite possibly at the level of cash in the bank.
I have no doubt some institutions and private holders will sell out, making the attempted takeover easier for CEO Gordon Smith but one wonders if anyone, including the NOMAD or independent NEDs, will stand-up to this AIM market p!ss take ?
