Tuesday 22nd July 2008
Myhome breaches covenants
Beleaguered franchiser Myhome International is contemplating a discounted share issue after breaking some covenants in an £8 million banking facility.
The AIM-quoted company, steered by expansive Australian chief executive Russell O’Connell, says it is holding ‘constructive discussions’ with Lloyds TSB over renegotiating the facility. These have already led to a decision to reduce the facility ‘significantly’ and Myhome says it is exploring options to achieve this, ‘including an equity issue which may be at a realistic discount to the current share price’.
Once a high-flyer, fast-growing Myhome lost £3.8 million pre-tax on its home services and motor franchise operations in the six months to March. The Esher-based company, which admitted selling far fewer franchises than it had expected, blamed the overall consumer slowdown and credit tightening for this, though some critics suggested it had overpaid in last November’s £16 million acquisition of the ChipsAway repair franchise group.
In March, Myhome appointed as chairman the ubiquitous Jon Pither, also chairman of St Helen’s Private Equity and a director of linked concerns. He, O’Connell and their board colleagues are in ‘preliminary discussions’ with some of the company’s larger shareholders, including small company backer Bruce Rowan’s Starvest vehicle, about participating in the mooted share issue.
Myhome shares, which hit 106p last summer, have now slumped to 3.88p, down 4p this morning. Avoid.
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