Troubled Totally has issued a warning to investors that shareholders may recover nothing from their investment as the company desperately attempts to sell off subsidiaries to prevent financial collapse.
The healthcare outsourcing company launched a strategic review three weeks ago to strength its balance sheet through asset sales. After appointing Ernst & Young to advise on the disposals, Totally said it has now received multiple offers for various business units but directors have painted a grim picture of the likely outcomes.
In a brief statement released today, the board made clear that asset disposals represent “the only realistic route” for meeting the group’s obligations.
Unfortunately for investors, the solution to meeting these obligations will leave little or no value in the company’s shares which fell over 30% on Friday. Totally shares have lost 95% of their value since the beginning of the year.
What began as a strategic review has evolved into what appears to be a fire sale of assets, with the company racing to raise cash.
The major issue for Totally is that even if the company successfully completes the disposal programme, the expected proceeds will fall well short of covering all future liabilities.
The group’s trading statement released in early May highlighted they were trading profitably on a monthly basis. This will be of little consequence if these income generating assets are sold to cover debts.
Totally may well be one of the next firms to leave London’s AIM.