Shares of troubled Warrington-based Eddie Stobart Logistics plc fell about 90% when the stock resumed trading on Wednesday after a six-month suspension.
The shares plummeted to around 7p, down from about 71p at the time of their suspension in August, as Eddie Stobart reported a £169 million impairment charge in its delayed half-year results for the six months ended May 31, 2019.
“The group recognised a £169.2m impairment charge, reflecting current business performance and challenging trading conditions, an increased discount rate associated with higher gearing and a more prudent assessment of medium and long term forecast profitability,” said the firm.
Eddie Stobart said adjusted loss before tax was £16.5 million for the period, compared to a restated £1.9 million loss over the same period in 2018.
Statutory loss before tax was £199.8 million.
Eddie Stobart said revenue grew 26% year-on-year to £421.3 million.
In December, Eddie Stobart shareholders approved a takeover from major shareholder, private equity group DBAY, which involved injecting £55 million of new financing into the firm in return for a majority stake.
For its full year expectations, Eddie Stobart said: “The board expects a small underlying EBIT loss for the full year, however shareholders should note that the loss could be greater and this is subject to audit by the group’s auditors, which may give rise to adjustments.”
On its new structure, Eddie Stobart said: “The company concluded the transaction with DBAY that was approved by shareholders in December 2019, resulting in a new ownership structure under which the company holds a 49% interest in the Eddie Stobart group …
“Shareholders have the opportunity to participate in the future growth in value of the Eddie Stobart group …
“This transaction provided £70m of additional liquidity, putting the Eddie Stobart group on a stable footing and providing a platform from which to develop.”
Eddie Stobart added: “As highlighted in the company’s announcement dated 14 November 2019, the conversion of the company to an AIM listed investing company is being considered by the board which would entail the company raising funds, prior to the end of May 2020, to co-invest alongside DBAY in private equity deals across Europe.
“Shareholder approval would be required for any such proposal and the board intends to seek the views of existing shareholders before pursuing such a transaction.
“To further align the interest of DBAY and the company’s shareholders, DBAY has agreed that the company has the right, at the time it becomes an investing company which is managed by DBAY, to purchase up to 49% of the PIK loan instrument that DBAY has used to fund the Eddie Stobart group.”