Merchant House withdraws from AIM as funding efforts fail

Financial services group Merchant House has announced it has failed to raise sufficient funds to restore trading in its shares on the AIM market.

Shares in Merchant House Group, which bought collapsed IFA group Clarkson Hill in 2010, have been suspended since April this year.

The group said in a statement to the market: 'The company regrets to announce that despite considerable efforts by the board, the company has been unable to raise sufficient funding in time to restore trading on AIM in the company's ordinary shares and therefore admission to AIM will be cancelled pursuant to the AIM rules.'

It added that it had entered into some investment agreements that were conditional on the share suspension being lifted, and that it would now seek to renegotiate those deals. 'There is no guarantee that these discussions will result in a satisfactory outcome but shareholders and creditors will be updated within the next few days,' it said.

'In the meantime the company will consider all the options open to it to preserve value to shareholders,' it added. Group chairman James Holmes said in October that if the company failed to secure further funding it would consider selling off parts of the business.

Merchant House requested the suspension of its shares in March this year and, after trading was briefly reinstated, in April, due to capital fears.

The group's acquisition of assets from Clarkson Hill, and recruitment of 188 advisers from the national IFA, has taken its toll on the company. In its results for 2011, it blamed a £5.6 million loss in part on delays in reauthorising those advisers with the Financial Services Authority. 

The collapse of Pritchard Stockbrokers in March also affected the group, which used Pritchards as the custodian for its structured product subsidiary Merchant Capital. It held £8.8 million on account with Pritchard at the end of June 2011, and said earlier this year it could not determine whether its clients would lose out as a result of the Financial Services Authority’s (FSA) decision to stop Pritchard carrying out business.