25 May 2012

TEG Group to raise £3.8m

20/06/2011 Ben Jaglom

'Green' composting specialist TEG Group (TEG) is to raise £3.8 million through a placing at a considerable discount to its market price.

The company, which is looking to raise the money at 10p a share - a discount of almost 60 per cent to Friday's closing price of 23.75p, says the placing is to help the business with its cashflow problems. It noted that following the awarding in 2009 of a contract with the Greater Manchester Waste Authority worth £38 million there have been 'a number of payments and retentions relating to the three facilities that are now significantly overdue.' These are worth a total of £900,000. Of the £3.8 million being raised some £3 million is being placed with institutional investors, with the remaining £800,000 to be sold via a 1 for 10 open offer.

Speaking to Growth Company Investor CEO Mike Fishwick argued that despite the placing TEG is 'not desperately in need of the cash' though the money would be useful to 'move the business forward' adding that it was 'disappointing' that the 'market has driven us towards that price.' Regarding the future he remarked the company is 'planning to grow in the same way as before' with TEG expecting a 'reasonable' set of results.

Growth Company Investor last recommended shares in the company this March at 26.5p and they have plummeted 45 per cent today, currently trading at 10.5p. Existing shareholders are likely to be extremely unhappy at today's events, and we therefore suggest staying clear for now.

Tags: Composting group, Green technology, Organic businesses, TEG Group

Sector: Industrial Engineering

Companies: TEG

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