Ennstone shares suspended

Shares in Ennstone have been suspended as the group's US cash position “remains critical”.

The aggregates and asphalt player carries around £200m of debt and its shares have crashed from 35p to 0.3p in past four months – leaving shareholders with pieces of paper that are virtually worthless.

A month ago there was a glimmer of hope when Ennstone announced that it was “continuing to progress proposals” which it had received for a sale of the group as a whole or a substantial part of the Group's UK businesses.

The deal would have involved an equity investment and a refinancing of the group.

Discussions have not progressed well and “the likelihood of successfully concluding a solvent proposal for Ennstone as a whole has now diminished greatly’.

Ennstone has been battling to “manage its cash position rigorously” and that has resulted in several non-core assets being jettisoned in the search for short-term working capital - in both the UK and US.

Ennstone’s UK lenders remain supportive of the UK businesses and discussions are continuing to seek a solvent solution for Ennstone's UK and Polish subsidiaries. There should be an announcement on this front “in the near future”.

In the US, however, the group's cash position remains critical. The US subsidiary has suspended payments of interest charges and finance lease repayments to its US lenders.

Discussions with those lenders are on-going, and proposals have been made which may result in a solvent US solution. However, the US lenders are still considering these proposals.

In the absence of an agreed way forward with the US lenders by the end of January 2009, the liquidity position of Ennstone Inc (i.e. the US subsidiary) will become critical.

In the UK, the board reckons that Ennstone has sufficient cash headroom through to the end of March 2009, on the basis that the UK lenders maintain their current facilities “alongside additional supportive actions with lease finance providers and other stakeholders”.

The Group's UK businesses, Ennstone Johnston and Ennstone Thistle, along with its Polish subsidiary (Ennstone Sp) have continued to perform satisfactorily in the difficult trading environment.

Ennstone said: “They would be in a position to continue to do so following the implementation of any required restructuring of the group.”

With newly created predator Marwyn Materials waiting in the wings, with an acquisition pot of £80m, the scenario is set for Ennstone to continue to work to offload enough of its £200m debt problems until the remaining elements leave Marwyn in a position where it feels able to step in.