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RSM Tenon: Baker Tilly offer would be ‘minimal’ due to debt

Advisory and support services business RSM Tenon has announced that any offer by accountancy firm Baker Tilly would likely be of “minimal value” due to the group’s “high debt level”, as speculation mounts that the takeover talks will lead to an offer for the business.

News broke on 25 July that Baker Tilly is looking at the possibility of acquiring RSM Tenon. At the time, the accountancy firm said it would likely be “significantly below” the current share price. RSM Tenon shares plummeted 34 per cent to close on 2.25p following the comments.

In an update, published on the London Stock Exchange today (16 August), RSM Tenon said discussions with Baker Tilly “are continuing” but warned that “it is now likely that, as a consequence of the company’s high debt level, if an offer is made by Baker Tilly, minimal value, if any, will be attributed to the issued share capital of the company”.

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It also said that Lloyds Banking Group continues to be “supportive” of the business as the company discusses with it ways to address its high level of borrowings.

According to its results for the year to June 2012, net debt increased to £78.3m from £68.2m in 2010/2011.

According to the same results announcement, last year the firm made a loss after tax of £88.7m after having made profit of close to £1m in 2010/2011. It posted an underlying operational loss of £8.9m - in 2010/2011 it registered underlying profit of £18.5m - as revenues fell by almost 9 per cent to £208.2m.

As part of a major restructuring which saw 400 staff made redundant, RSM Tenon sold its insolvency unit to Grant Thornton in a £7m deal in October 2012.