Utilitywise puts itself up for sale as it seeks £10million to finance new business plans
Energy consultancy firm Utilitywise has put itself up for sale and is seeking £10million finance to fund its new business strategy.
The firm said it is reviewing its options, including selling certain parts or all of the group, following a number of headwinds in its enterprise division. Shares dropped 47% to 3p on the news.
The company, which was founded by South Shields FC chairman Geoff Thompson, who is no longer on the board, was formerly based in the former Garlands call centre in Long Row, Market Dock but moved to Cobalt Business Park in North Tyneside after announcing it would pull out of South Shields in 2014.
The firm said that in the past two years it has experienced a number of "significant and unexpected challenges and legacy issues" in its enterprise division that has hit its financial performance.
These included the repayment of commission to an energy supplier due to poor operational controls, weaknesses in industry processes relating to early-termination of customer contracts and the introduction of lower caps from energy suppliers on the amount of commission that third-party intermediaries such as Utilitywise can charge customers.
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Utilitywise said it needs about £10million to execute its new strategy that focuses on the group's corporate division and to enter the micro, small and medium enterprise (SME) market, which it expects will result in profitable growth and significant cash flow in the medium term.
It added that it has also taken steps to improve its enterprise division and reduce costs.
But Utilitywise said it has not attracted a "sufficient level of interest" from existing and new investors to fund the investment, general working requirements of the group and to refinance its £25 million loan. The group continues to be in talks with its bank to provide further financial support.
Given the shortfall in investor appetite for the proposed fundraising, Utilitywise said it will not be able to publish its accounts for fiscal 2018 before January 31 and therefore the group's shares will cease to trade on the London Stock Exchange's Alternative Investment Market on February 1.