Following a lengthy battle for survival, the
asset and trade finance specialist Davenham has decided to stop
writing new business and expects to de-list from AIM following a
strategic review of its business.
It plans to collect in its existing book and
to hold a shareholder meeting at which it will propose to cancel
its securities on AIM.
Go deeper with GlobalData
The share price of the company plummeted 71.4
percent to 0.5 pence in reaction to the news, announced yesterday
morning.
During its 19-year history, Davenham rose to
become one of Britain’s top asset finance providers.
However, it was crippled by the recession and
writedowns in its property arm which caused its net asset value to
plummet from 26.3 million in 2008 to £3 million by year end last
year
The Manchester-based company recorded
operating losses a year ago of nearly £50 million, compared with
profits of £13.1 million in June 2008.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIts decision to close new business followed a
long running strategic review, carried out by both Davenham and
Hawkpoint Partners, a corporate finance advisory firm.
Its hardest hit division, its property finance
arm, was closed to new business during the first half of 2009.
Soon afterwards it ceased
writing new business in its small ticket leasing and professional
loans, although it continued to offer loans through its
trade and larger ticket asset finance divisions.
The SME specialist lender, which was formed 19
years ago and has offices in Manchester, Leeds, Birmingham and
London, announced in January it was looking for a buyer.
Subsequently, rumours emerged that it was
planning to hold on to its better performing asset finance arm.
At the NACFB Commercial Finance Expo in
Birmingham, taking place on the day the announcement was made,
brokers expressed their disappointment over the news, as well as
surprise that a buyer had not been found for the
ailing company’s asset finance book.
After posting heavy losses at the end of 2008,
the company introduced a wave of costs savings measures last year,
including making redundancies and closing offices.
It managed to almost halve its administrative
expenses to £6.2 million, and it scaled-back its loan portfolio
from £247.3m down to £144.2m by December last year.
It also took control of its impairment
charges, which dropped from £31.3 million at the end of 2008 to
£1.8 million in December last year.
However, these efforts were not enough to keep
the company afloat. In a statement yesterday, Davenham concluded
that “there is no value for ordinary shareholders in the
company”.
Davenham launched an acquisition finance
business in January 2007, but had to scale back lending to IFAs
last September, after property loans went bad.
Six months later, in June 2009, not long
before the start of the banking crisis, bought London Scottish’s
leasing business, Manor Credit, for £25.1 million.
Brendan Malkin
