November 19, 2009 / 10:08 AM / 10 years ago

UPDATE 2-Raymarine says unable to meet debt covenants

* 10-month revenue falls 23 pct to 88.9 mln stg

* In talks for potential sale of business

* Says shareholders likely to realise little value

* Shares fall to their year low (Recasts, adds analyst comments, details)

By Aditi Samajpati

BANGALORE, Nov 19 (Reuters) - Debt-laden British firm Raymarine RAY.L said it was unable to comply with certain financial covenants and reported a 23 percent drop in sales for the first 10 months, sending its shares down as much as 37 percent.

The marine electronic products supplier, which ended the period with a net debt of 91.6 million pounds ($152.7 million), said it was in talks to either sell its business or equity.

“In light of these discussions the board considers it increasingly likely that little, if any value for ordinary shareholders will be realised,” it added.

Garmin Ltd (GRMN.O) was in talks to buy the company in August, but Seymour Pierce analyst Ian Robertson said there was no reason for the U.S. navigation device maker or other companies to consider a takeover at the moment.

Moreover, after several fund raisings in the UK small-cap technology market, few investors would be willing to put money into Raymarine, Robertson told Reuters.

“Insolvency is the most likely course, if I were a betting man,” he said.

The company said its existing bank loans would mature in March 2010 and that it is reliant on continuing covenant waivers from its syndicate, with the current waiver expiring on Dec. 4.

Raymarine, which makes fishfinders, autopilots, marine radar and GPS systems for leisure boats, said its banking syndicate has agreed to provide an additional facility of 15 million pounds, also maturing in March 2010, subject to covenant waivers.

“The future of the company is really in the hands of the banks. This has been going over for a year or so now, and I think their patience is wearing quite thin,” analyst Robertson said.

The company said it incurred significant one-time costs in the second half of the year, related to professional and bank fees for exploring long-term refinancing options.

In the period ended Oct. 30, the company had sales of 88.9 million pounds, compared with 115.3 million pounds a year ago.

Raymarine said although there was some moderation in the rate of sales decline, uncertainty in its markets was likely to continue into 2010.

Shares of the company were down 35 percent at 7.2 pence at 1356 GMT on the London Stock Exchange. They had touched a market low of 6.66 pence earlier in the session. ($1=.5989 Pound) (Reporting by Aditi Samajpati in Bangalore; Editing by Anil D’Silva)

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