Concha 'disappointed' after Ve Interactive fiasco

Concha issued another update on its investment in Ve Interactive on Thursday, expressing its disappointment as it was left without an investee company following a rapid administration period and subsequent sale in April.

The AIM-traded firm had reported in March that a new management consortium had been introduced to Ve, with the primary objectives of stabilising the business and executing a programme of solvent restructure.

At that time, the on-going viability of the business was said to be dependent on the new management consortium securing the necessary funding to recapitalise its balance sheet and restructure a number of onerous debt obligations entered into by the former founding management team.

“On 15 March, management communicated their intention to secure a minimum of £20m in new funding, from a combination of both existing share and debt holders together with new identified parties,” Concha explained in its statement on Thursday.

“On 7 April, HMRC served a second winding up petition on the company, the first having been satisfied by the injection of funds introduced to the business by the new management consortium a month earlier.”

Throughout that time, Concha said Ve’s new management team continued to actively engage with the existing share and debt holder base in order to provide greater insight into their future plans for the firm, and assist the diligence process of all interested parties wishing to evaluate the proposed new funding arrangements.

By the time of the second winding-up petition, the management had secured a maximum of £13.1m in conditional new funding, Concha claimed.

“As a result of this action, the timetable afforded the new management team in concluding its fundraising was accelerated and in the absence of having secured the necessary funding required to meet the short term needs of the business going forward, Smith and Williamson were formally engaged by Ve on 13 April in preparation for an insolvency appointment over Ve.

“On 24 April, an application to the Leeds District Registry of the High Court, to be heard the following day, was made by a creditor seeking to place Ve into administration.

“On 25 April, Smith and Williamson were appointed as administrators to the company,” Concha explained.

Later that same day, as part of a pre-packaged arrangement, the business and assets of Ve were sold to Rowchester for a cash consideration of £2m, payable in instalments over a 12 month period ending April 2018.

The directors of Rowchester comprised members of the incoming Ve management consortium.

“The Board of Concha is deeply disappointed by the recent events and circumstances of the last few months, particularly the actions of both the founder management team and their advisors.

“We - together with other former shareholders in Ve, which in combination have advanced more than £50m in equity funding since the company began trading in 2009 - will continue to investigate the actions of those responsible for its demise and indeed any opportunity to participate in the assets and business of Ve going forward, however at this time there can be no guarantees of any such involvement.”

Concha said the impact of the recent events eliminated any residual carrying value in Concha's former investment in Ve.

In the event that situation changes and Concha is either able to secure a participation in the new business going forward or recover value from its former investment, it said it would communicate details at the appropriate time.

“In the meantime, your board will continue to review new investment opportunities in order to restore value for its shareholder base.”