31st Jan 2007 16:39
Legacy Distribution Group, Inc.31 January 2007 Legacy Distribution Group Inc. (the "Company") This announcement is provided by way of an update to the announcement made on 8December 2006, which resulted in the suspension of trading in the Company'sshares. Background to the suspension of trading Fred Gretsch was appointed as the Company's Finance Director on 12 June 2006.Following the publication of the Company's interim results on 28 September 2006,at the request of the Board of the Company (the "Board"), Fred Gretsch commenceda review of the Company's financial systems. During this process, Mr Gretschexperienced difficulty in reconciling the management accounts for the 9 monthsto 30 September 2006 with the published interim results to 30 June 2006. Thisled the Board to question the appropriateness of the Company's financial systemsand their ability to provide the Board with accurate financial results. As a consequence, on 8 December 2006, the Company requested and was granted asuspension of the trading in its shares pending further investigation andclarification of its financial position. Post suspension update Since the suspension of trading in the Company's shares, the Board, led by theNon-Executive Directors and Mr Gretsch, has continued its investigations intothe financial and trading position of the Company. Whilst the review process isstill ongoing and no firm conclusions have been reached as to the full extent ofthe problems faced by the Company, it has become apparent that the Company hasbeen trading unprofitably for some time. This unprofitable trading has resulted in the Company breaching certain of itsbanking covenants which it has not been possible to remedy. As a consequence,the Company has received a demand for immediate repayment of all amountsoutstanding to its principal bank. The financial uncertainty surrounding the Company has meant that suppliers havebeen unwilling to provide credit terms to the Company to enable it to makenecessary inventory purchases. This has made trading extremely difficult. The bank is currently undertaking its own detailed review of the financial andtrading position of the Company to establish the options available to it tomaximise the amounts recoverable by it. In addition to this, a Notice of Summonsfor a Chapter 7 Involuntary Petition has been filed on Best Candy & TobaccoCompany, the Company's trading subsidiary, by three of its creditors. If thepetition is approved, the business will cease operations and a trustee beappointed to realise value for creditors. The Company will make a further announcement as soon as is practicable. Director resignations In light of the above and as announced on 30 January 2007, at the request of theindependent Non-Executive Directors of the Company, Frank Patton and Tim Riedel,the Company's Chief Executive Officer and Chief Marketing Officer respectively,resigned with immediate effect. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Logistics Dev