Hornby announces plans to raise £12m in share sale
Troubled toymaker Hornby has confirmed plans to raise £12m (€13m) through a fresh equity placing meant to help shore up its balance sheet and fund the purchase of its new boss's business.
It is the third time in three years that the Scalextric-to-Airfix business has turned to investors for extra cash, having unveiled a £15m (€16m) equity fundraise in 2015 and a further £8m (€9m) in 2016.
The latest funds will be used to shore up the company's balance sheet, provide "necessary funding to support the new strategy", and finance the purchase of a 49% stake in Oxford Diecast parent firm LCD Enterprises - a firm majority-owned by new chief executive Lyndon Davies.
Mr Davies said that a recent review of the business has helped reveal "opportunities to improve performance".
"The strategy we are announcing today to invest in Hornby's key brands, to instigate a clear pricing policy and to seek additional funds to further strengthen its balance sheet, I believe, will provide the platform for long-term sustainable profitability and cash generation.
"By simplifying and improving basic business process, together with better selection and delivery of the highest quality products, we will re--establish the value of our brands in the eyes of consumers and collectors alike."
The news was released as part of Hornby's half-year results, which showed a 22% drop in group revenue from £21.9m (€24.5m) to £17m (€19m) and a further widening of its statutory loss from £4.7 m (€5.2m) to £5.7m (€6.3m).
Net debt more than doubled over the period to £4.7m (€5.2m) from £2.1m (€2.3m) a year earlier.
Hornby - best known for its model railways - confirmed last month that its performance for the year to date had been "below expectations", adding that, as part of a new strategy to maximise the value of its brands, Hornby would no longer sell large amounts of stock at a discount.
It comes amid a management shake-up, with the company announcing in October that interim chairman David Adams was stepping down to take up another appointment, having just been appointed to the role in June.
The announcement was made just weeks after the company said it was appointing Mr Davies and was "exploring the opportunity to invest in LCD".
The new chief executive has been tasked with pushing through the remaining stages of an overhaul at the troubled firm, which has seen it reduce product ranges and cut back on investment.
The group is now majority owned by Phoenix Asset Management, which has said it intends to "increase its understanding of Hornby and its longer-term strategy for delivering further earnings growth following the completion of its turnaround strategy, by entering into further discussions with its management and the board of Hornby".
