API Group’s shares slashed following cash crisis

API Group, the packaging firm, has stunned investors after warning it is likely to breach its UK banking facilities in November after discovering a ‘cash flow shortfall’ in its domestic business. The warning triggered a sell-off of API’s shares which crashed by nearly half last Friday.

The group announced that it is reviewing several options to deal with the cash shortfall, one being to seek financial support from its largest shareholders which is currently Steel Partners, the US hedge fund, which has a stake of more than 29%.

In spite of the share sell-off, sources close to the company said that the breach of banking facilities was just a technical issue. It is understood that API is not considering redundancies.

API made losses of £2.5 million on sales of £50.3 million in the 6 months to end of March 2007. The group has been affected by declining European sales of non-holographic foils including the strength of the pound in US and Asian markets.

API is based in Poynton near Stockport and makes laminated packaging for cigarette packets and holographic foils for products such as Colgate toothpaste. It employs approximately 400 staff in the UK with other branches in Livingstone, Scotland and Salford, near Manchester.

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