Trading in shares of Sport Media Group, publisher of the Daily and Sunday Sport, has been suspended ‘pending clarification of its financial position”.
The company made the announcement to The City this morning that a temporary suspension had been put in place at its request, with effect from today.
Sport Media Group said the business had experienced an ‘insufficient recovery in trading since the adverse weather in December 2010’which had in turn resulted in pressure on its working capital.
‘This has led to uncertainty around ongoing support from its bankers,’the company said in a statement.
‘The company is working with the bank to resolve these issues and will update the market as soon as practicable.”
In September, the company said the Royal Bank of Scotland had agreed to defer its monthly loan repayment of £50,000 for a period of six months to provide its necessary working capital. That agreement is now due to end.
The deferment allowed the company to return to profit as it made an underlying pre-tax profit of £330,000 in the previous six month. However, the firm has been continually constrained by debt repayments incurred from the 2007 reverse takeover by Interactive World.
Sport Media Group was bailed out in April 2009 by former owner David Sullivan and Gold Group International who agreed to a loan of £1.68m to help restructure the business. Sullivan also took a 9.9 per cent stake.
The company is expected to publish its full-year results for 2010 later this month.
Sport Media Group also said today executive director Robert Johnson had tended his resignation from the board with immediate effect to focus his attention on the operational management of the Digital Division.
He remains a director of Netcollex, a wholly owned subsidiary of the company and Telecom2, a 51 per cent subsidiary of Netcollex.