UK Tissue Converter Accrol Lifts Suspension on AIM

The UK-based tissue converter Accrol Group has lifted the suspension of trading of its shares on the London Stock Exchange’s AIM market that was put in place on October 5. The company has also proposed a placing of £18 million ($23.8 million), by way of a conditional placing of 36,000,000 new ordinary shares of £0.001 each in the capital of the company. The move is aimed at mitigating short-term funding requirements, supporting future working capital requirements and implementing restructuring to improve operational aspects of the business, among other reasons. If approved by Accrol’s shareholders, the new stocks are expected to represent roughly 37.9% of the enlarged issued share capital of the company.

"The past few weeks have been extremely challenging for Accrol and its shareholders, as we navigated our way through industry-wide issues and sought a solution to the group’s short-term funding problems," Accrol chairman Peter Cheung commented. He added: "We believe that the business is through the worst and thank all our investors for their patience during the period of suspension."

Earlier this year, the company had to shoulder strong price increases for both hardwood and softwood pulp and, prior to the October 5 announcement, "had achieved limited success in passing on these inflationary pressures to its customers," it noted. Nevertheless, Accrol said it made "tangible progress on agreeing price increases with its customers" in the last couple of weeks. 

On the working capital side, the firm has already implemented a number of initiatives including a reduction in finished goods, raw material stocks and the collection of older debtors, resulting in working capital improvements of £5 million.

Finally, Accrol’s board of directors also undertook a full review of the company’s operations and started a comprehensive restructuring to improve operational efficiencies. The restructuring plan will be deployed during the next 12 months and is expected to result in savings of roughly 6% per year. According to Accrol, the plan includes, amongst others, a proposed reduction in headcount of 89.