Embattled Merchant House Group has today cancelled trading on the London Stock Exchange’s Alternative Investment Market after failing to raise sufficient funding to continue.
In a statement to the stock market, the company said that despite “considerable efforts” by its board, it has not been able to raise enough funding to restore trading on the index and has therefore had its Aim listing cancelled as of 7am this morning (28 November).
It added that it had struck multiple investment agreements which hinge on the lifting of the suspension on company shares and that could now fall through. Merchant’s shares have been suspended since March 2012, when a large number of shares were issued without announcement.
The statement said“The directors intend to enter into discussion with the funding parties to determine if this condition may be waived.
“There is no guarantee that these discussions will result in a satisfactory outcome but shareholders and creditors will be updated within the next few days.”
The statement concluded by saying in the meantime it will consider all options to preserve value for stakeholders.
In March 2012 trading was initially suspended after company bosses discovered shares representing 14.1 per cent of the company had been issued without announcement or trading on Aim.
The company was hit by the collapse of Pritchard Stockbrokers in March 2012, when it transferred 98 per cent of client funds away from the broker before it collapsed following a Financial Services Authority supervisory notice, leaving £6m of client monies frozen at Pritchard.
In June, the company announced it had received £2m of funding via the issue of equity. However, the suspension of Merchant House shares continued due to a delay in the publication of its annual accounts.
In financial results published in October, the embattled company cited delays by the Financial Services Authority in re-authorising advisers following the company’s purchase of Clarkson Hill Group in 2010 as the main cause of a £2.4m loss.
Following these lacklustre results, the company cut a number of advisers who it said had failed to bring in significant profits. Former board member Christopher Day stepped down from his position shortly thereafter.