A Neil Woodford-backed pallet maker suspended trading on Monday, creating more problems for the beleaguered manager who has been struggling to shore up liquidity in his gated equity income fund.
RM2 International was one of four companies listed on Aim, London’s junior stock market, that had its shares frozen for failing to produce its annual results in time for the deadline at the end of June.
The company had already warned investors last week on 26 June that there was a “strong likelihood” it would have to delay publishing its annual accounts and its shares would be suspended. This sent shares in the company plummeting by around 75% to 6p a share, leaving it with a market cap of sub £3m.
Luxembourg-based RM2 specialises in providing “smart” pallets to logistics and warehouse operators that can track and trace products during transit. It claims to use new manufacturing techniques to create a more durable pallet than can survive one hundred trips instead of the standard three.
Woodford is the smart pallet maker’s largest backer, owning over 60% of RM2’s shares, according to a shareholder breakdown on the firm’s website last updated on 5 April 2019.
The company has a star-studded board chaired by Ian Molson of the Canadian Molson beer empire and counts ex-Marks & Spencer boss Lord Rose and former Diageo chief executive Paul Walsh among its non-executive directors. Molson and his associated family trusts own 6.1% of the issued ordinary share capital, while Rose and Walsh own a 1% and 0.5% stake respectively.
The smart pallet maker has been struggling to make ends meet for the better part of a year. At the end of May its cash balance was $3.3m but it admitted to burning through $2.3m each month.
Woodford has bailed the company out by participating in several rescue fundraisings.
At the beginning of April he had 41.7% of the voting rights in the firm, which were spread across the Woodford Equity Income fund, the Woodford Patient Capital Trust and the Omnis Income & Growth fund, which he was booted from after his largest Oeic was gated.
RM2 is the fourth Woodford-backed holding to suspend dealing this year. The International Stock Exchange temporarily suspended a trio of investments in his equity income fund that the stricken UK equities manager had listed in Guernsey to keep within the Ucits 10% limit on holding unquoted companies.
RM2 said on Monday it was continuing discussions with potential lenders and without this funding it would not be able to finalise and publish its accounts. The firm said it will notify investors as and when there are further developments.
