PCF Group PLC (AIM:PCF) revealed it is in early-stage talks with Castle Trust Capital PLC over a potential offer to buy the company, in a deal that would leave PCF shareholders retaining a small minority stake in the combined firm.
The news came at the same time as a suspension of trading in PCF's shares was lifted, following the publication of delayed financial results and as the company announced details of a new recapitalisation.
PCF, in one of three stock market statements, said it would raise £2.74mln of gross proceeds through the issue of some 54.8mln new shares which would represent 21.9% of the company’s existing share capital.
The placing shares are being bought by Somers Ltd, PCF’s majority shareholder, and will see its interest in the company increase to 73.3% from 64.4%. PCF noted that Somers remains supportive of the company and has indicated its willingness to support a further £1.48mln equity subscription in late June 2022.
Alongside today’s investment from Somers, meanwhile, PCF will launch an €8mln open offer enabling its broader shareholder base to participate in an equity issue on the same terms as Somers.
PCF said proceeds from the capital raise will be used to support its growth.
The company’s third statement of the morning contained financial results for the 12 months ended 30 September 2021.
It comprised a £3.1mln statutory loss for the period and adjusted profit before tax of £700,000, whilst operating income increased 1% year-on-year to £26.8mln.
The company noted that its business and financial performance was significantly impacted by the remediation of legacy governance and control issues.
Over the 12 months, net loans and advances decreased by 15% to £364mln, new loan origination totalled £187mln and credit impairment charges amounted to £6.7mln.
Staff and operating expenses increased 56% to £21.2mln, due to an increased headcount and professional services costs, including £3.6mln related to the remediation of legacy issues. Retail deposits remained stable at £327mln, compared to £342mln in the prior year.
Garry Stran, who was acting chief executive during PCF’s process of remediation, has now been appointed as the company’s chief executive on a permanent basis.
"Though the 2021 financial year was a difficult one for the PCF Group, with significant events and subsequent change taking place in the business, I am pleased to report that since the end of this reporting period, amidst a challenging social and economic backdrop, the group has achieved major milestones in its recovery programme," said PCF chair Simon Moore.
"With strong progress made against our remediation and enhancement objectives, the board and executive team can once again begin to focus on driving increased levels of automation and exploring product development to diversify and develop our franchise."
Moore added: “I am pleased that Garry has now been appointed as CEO of the company.
“Garry and the executive team will continue the work started in the previous year, making PCF Bank ready for both the challenges and opportunities that lie ahead. His appointment provides the certainty and stability that are needed at the group going forward."
In London, PCF shares resumed trading at 7p, giving the company a market capitalisation of £21.3mln.