Pittards PLC shares dived on Friday, after it said it plans to raise £255,000 though a placing of 1.0 million shares at a price of 25 pence per share.

The placing price represents a discount of about 33% to the shares closing price of 37.5p on Thursday, being the last business day before the announcement.

Shares in the Yeovil, Somerset-based leather and leather goods producer were down 39% to 23.00p each in London on Friday afternoon.

Pittards explained: ‘The company has been operating at or around the ceiling of its bank facilities in recent months, principally as a result of significant adverse foreign currency movements, resulting from the weakening pound sterling. It has been managing its working capital very carefully in anticipation of agreeing new and potentially restructured bank facilities.’

However, it said that this process is taking longer than originally anticipated, and therefore in order to complete the process additional working capital is now required.

Following the announcement, Pittards said that directors have agreed to make interest free loans to the company, amounting to £85,000. It has been proposed that such loans be converted into 340,000 shares at a price of 25p in addition.

In addition, Edinburgh-based Lloyds Banking Group PLC has confirmed its intention to increase the company’s borrowing facilities by £340,000 and to extend its existing banking facilities until June 30, 2023.

Pittards expects that the proceeds will allow the company to continue to manage its working capital until at least the end of May, during which time it expects to have agreed new bank facilities with either Lloyds or an alternative provider.

‘If the necessary resolutions at the general meeting are not passed the placing will not proceed, and the company will not be able to continue to trade. Shareholders are therefore urged to vote in favour of the resolutions,’ Pittards said.

Pittards will hold a general meeting on April 11.

In February, Pittards warned that pretax profit for 2022 would fall short of market expectations, as a ‘number of factors’ hurt its performance in the latter part of the year. It took a $1.5 million hit in the latter part of the year, stemming from post-mini-budget pound weakness hurting its UK business, amid a dollar-denominated overdraft and maturing hedges.

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