Azlan cash call to follow refloat

Distributor attempts to raise #25 million in rights issue to improve cash flow

Azlan is understood to be on the verge of conducting a #25 million rights issue as the distributor prepares to have its shares refloated on the stock market by the end of the month.

The rights issue comes amid rumours that Azlan may also be in the throes of negotiating the sale of part of the company to boost funds.

According to one source, chairman and CEO Barrie Morgans met with key investors last week to discuss details of Azlan?s pending share reflotation. It was understood that on 22 September, he was in discussions with the company?s broker, SBC Warburg.

A source at Aberforth, the investment management firm which sold off its stake in the Azlan at the time of the first rights issue, maintained it was obvious that the distributor had to raise funds.

Azlan previously failed to raise funds through investors at the beginning of the year for the acquisition of Dutch company Akam and to finance general working capital needs in a #48.5 million rights issue.

However, the Aberforth source said: ?It is a surprise that Azlan is going in as an independent company rather than going through the corporate route and selling it off.?

According to City sources, losses of up to #15 million are also expected to be revealed when Azlan?s shares are refloated by the end of the month. But Morgans, who has constantly denied rumours of a buyout, has previously stated that the results at the time of the shares suspension were #15 million in the black.

The latest attempt at a rights issue would help fund operations and reassure major vendors, which Azlan met last week (PC Dealer, 17 September).

Azlan was unavailable for comment.