Just three months after its latest nasty profit warning and cash call that saw forecasts slashed, mobile finance business eServGlobal’s (ESG:AIM) is facing the prospect of the bailiffs knocking on its door. If fact the Australia-based company is being forced to arrange an emergency general meeting (EGM) to beg for shareholders nod to sort out its latest mess.
'At the time of the October update, eServ agreed a £5 million loan from Henderson Volantis, which could be drawn down in two equal tranches, to part fund a £5 million cash call by its money transfer venture with Mastercard and BICS,' helpfully explains Ian Spence, founder and chief analyst at IT consultancy Megabuyte.
Seemingly straight-forward so far, but ah, there's a catch since a second part of the loan deal required eServ to provide assets as security, to which its existing creditor, the National Australia Bank (NAB), has not agreed.
'In a rather unpleasant catch 22 situation, eServ needs the Volantis funds in order to pay back the NAB loan,' spells out Spence.
So now management of this extremely accident-prone company need shareholders to give the company permission to grant the required security to enable the draw-down of the second tranche.
'That's another fine mess you've gotten us in to,' as Oliver Hardy might say.
The shares have plunged 16% to 3.88p, which means the stock has lost 93% of their value in less than two years.