Shrunken stake

By THIS IS MONEY
Updated:

 

I have shares in Cedar, which is now owned by Alchemy. I have been told Redac are the new owners and I will get 3p a share in loan notes redeemable in 2006. Jon Moulton of Alchemy put Cedar into receivership and transferred the company to a firm called Redac, giving us small shareholders a pittance compared to the company's true worth. Can they do this - saving the future cream for themselves? SM, Milton Keynes.

Richard Hunter at stockbrokers the Fyshe Group says: Cedar was acquired by venture capital firm Alchemy in January 2002 for £4.2m, after warning that in the absence of a takeover, bankruptcy seemed inevitable.

The software group was at one stage valued at nearly £1bn, but fell foul to severe financial difficulties. It appears that the offer made to shareholders at the time of the takeover was only accepted by 69%, which is sufficient to have pushed the deal through but not to make the offer unconditional (for which 90% is required).

The last report on this subject suggested that Alchemy was planning a 14.8-for-1 rights issue to provide funding for the business, although of course this would have had the effect of diluting existing shareholders' holdings. It is not clear whether the rights issue has actually taken place. Contact Alchemy for further clarification.

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