Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Carter and Carter - many clearly think there are some major financing problems on the horizon

Carter and Carter hit the headlines again today after issuing a profit warning
Since the tragic death of the group’s founder Phillip Carter and his son in May the affairs of the company have gone from bad to worse.

Today it announced that it had been unsuccessful in its tenders for Phase 1 of Pathways To Work with the result that the group's adjusted profit before tax for the year ending 31 July 2007 will be in the order of £10.5m. The shares slumped c80%!

With the group’s market capitalisation standing at £21m at the close of play today you could be forgiven for thinking that the shares now look a bit of a steal. However, it’s the debt that’s worrying! At 31 January 2007 the Group's net debt was £85.9m and it has made several more cash acquisitions since then. I’m not sure today’s 80% share price fall is actually accurate (trying picking up a good chunk at this level!), however, a dramatic fall of even half this level surely still implies that many out there think something more sinister is afoot.

The group is also in the process of renegotiating its bank facilities to reflect the revised expectations and the outcome of this will be key.

The exceptionally strong tendering pipeline referred to in the interim results doesn’t look quite so strong now!

Anyway, surely it’s all immaterial relative to the sad event in May


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