Britain's Redstone Telecom escaped insolvency today after investors backed an emergency share issue but its bludgeoned stock fell again as its chief executive quit and it disclosed failures in financial controls.
The once high-flying company said it would issue a massive 2.65 billion shares at just one penny each to raise up to £25.3 million pounds, net of expenses, for working capital needed to keep the company in business.
"It is very much a last-chance saloon job," analyst Mr Nigel Hawkins of Williams de Broe.
"They have openly admitted they got the stock exchange to waive various rules because of theirfinancial position. Very few companies are quite as blunt as that," Mr Hawkins said.
Shares in Redstone, once a budding telecoms major with a market value approaching £1 billion, more than halved to a new low of two pence after the news, which included ballooning pre-tax losses for the year ended March 31st.
The stock, which peaked above 967p in February last year, was trading down 41 per cent at 2-1/2p by midday, valuing it at around £2.6 million.
Redstone said Mr Graham Cove - its chief executive since its formation in 1995 - had stepped down, the fourth senior executive to quit in three months.
Redstone admitted to a failure in its internal controls and reporting, saying in some instances they were below the standard expected of a public company. Little had been done to address identified control risks at acquired companies.