North East offshore company Tekmar has put itself up for sale, saying it does not have cash available to turn around a loss-making position.
The Darlington-based firm had been bullish about its prospects earlier this year when it raised £4m from a successful share placing. Last month it celebrated a “significant” contract in the US to provide its cable protection systems to an offshore wind farm.
Tekmar’s position as a key supplier to firms in the offshore energy industry had raised hopes that it would see substantial growth in the coming years.
Read more: go here for more North East business news
But last October the company issued a profit warning and in March it released accounts for a “challenging” 18 months in which it slipped to an Ebitda loss of £2.1m.
After partly blaming that loss on the pandemic, Tekmar says “there are clear signs that the market is recovering and that the group is now well positioned to benefit from this as recent contract wins have demonstrated.”
But it has now issued a statement to the Stock Exchange in which it says that it needs a ‘strategic partner’ to help it deliver its turnaround strategy.
It said: “Whilst the group is currently operating with sufficient working capital for its present requirements, the combination of sustained trading losses and increased pressure on working capital mean that the group may not have the necessary cash to make all the required investment to deliver fully the turnaround strategy to return the group to profitable cash generation within the timescale targeted by the board.
Most Read
“In light of these matters, the board considers that the group’s best interests would be served by seeking a strategic partner to support its opportunities for growth and provide additional balance sheet strength.
“Accordingly, the board has now determined to undertake a review of the strategic options open to it in order to maximise value for shareholders. These options include, but are not limited to, a sale of the company which will be conducted under the framework of a “formal sale process” in accordance with the Takeover Code.”
Tekmar is working with Bamburgh Capital - which has offices in Newcastle, Manchester and Edinburgh - as financial adviser to manage the formal sale process. The firm added that it is not in any current discussions with interested parties and there can be no certainty that an offer will be made or accepted.
Separately, Tekmar has announced half-year results for the period up to March 31 in which revenues fell slightly to £13m and it posted an adjusted Ebitda loss of £1.8m. It said the loss, though wider than the corresponding period last year, was in line with management expectations.
The company highlighted recent contract wins on the Dogger Bank wind farm in the North East, alongside awards in the Middle East and US, saying it had a “healthy order book” of £20.1m.
But it said its cash position of £10.3m had been overstated by a £5.2m customer overpayment which it has repaid.