Redstone refinances as boss quits

Debt-laden reseller Redstone claims its future development has been secured after scoring a capital injection of up to £6m.

In a separate announcement, the Alternative Investment Market-listed VAR revealed that executive chairman Alan Coppin is to soon step down.

Redstone – which made a string of acquisitions in 2006 and 2007 – has been exploring ways to cut debt to a "more sustainable level" and this morning announced it has secured up to £6m of new funding to shore up its balance sheet.

At the same time, the VAR has reached an agreement with speech recognition firm Eckoh to restructure the outstanding loan owed by Symphony Telecom – a mobility firm Redstone bought from Eckoh in 2006. Redstone will now pay £1m of the amount owed on 1 October 2011 and the balance a year later. But in return, it has agreed to pay Eckoh an extra fee totalling £530,000, £125,000 of which must be paid immediately.

The VAR views asset disposals as another way to cut debt and in August it sold its telecoms business to Daisy for £17m. Last week Redstone revealed it had received an "early-stage approach" from an unnamed suitor.

Although it is unclear what impact the latest announcement will have on its disposal strategy, Redstone claimed the refinancing plan secures its long-term future.

"The injection of new capital and revision of existing debt agreements helps secure the future development of the group as it focuses on its key ICT strengths," it said in a statement.

Separately, Redstone announced that executive chairman Alan Coppin is to step down from the board just five months after taking the reins from previous chief executive Martin Balaam.

Coppin, who is set to hand power to Stephen Yapp after Redstone posts its accounts to shareholders, said it was the "right time to leave" following his efforts to reshape the firm.

He said: "During my short term as interim executive chairman, Redstone's response to the challenging operating environment has been robust and has included the disposal of two of the Group's five divisions and the consequent strategic refocusing of Redstone as an ICT company; the signing of the Birmingham Building Schools for the Future contract; further cost reductions; and, most recently, a shareholder-led refinancing exercise."

Chris Batterham, chairman of Eckoh, said: "Over recent weeks, the board has been working closely with Redstone to assist them in their refinancing project which
will help secure their financial future and give Eckoh a significantly higher
probability that the full outstanding debt will eventually be repaid."