The new board of AssetCo, the firm that used to maintain London’s fire engines, today said it was suing its past management for more than £50 million over a “very significant decline in [shareholder] value”.
The troubled Aim-listed company sold its UK business, which owned and maintained fire engines in the capital, to private-equity firm AB&A Investments for just £2 in August.
That division had made a £16.5 million loss for the audited 18-month period to October 2011, a year when its sharply falling share price led to shareholder revolt, where chief executive John Shannon was replaced by Tudor Davies.
It had four separate fundraisings adding up to £53 million between 2009 and 2011 and then had to post massive restatements to its 2009 and 2010 financial accounts.
Now the firm’s new board, which is focusing on fire-fighting contracts in the United Arab Emirates, said: “The funds raised between 2009 and 2011 had primarily been utilised in support of an apparently flawed business and financial model... without any reasonable prospect of shareholder value. Following expert advice, the new board is at the early stages of pursuing claims against those associated with the past for in excess of £50 million.”
Shares in AssetCo inched up 9p to 340p, more than 300 times lower than their price four years ago.
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