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Flamingo asks for 7m euros from investors to stay afloat

Flamingo asks for 7m euros from investors to stay afloat
13.07.2009, 17:56 8

IT&C and home appliances retailer Flamingo International (FLA), which is faced with a dramatic market decline, is asking for the shareholders' approval for a 7 million-euro convertible bond issue. The issue is larger than the company's 5.7 million-euro capitalisation on the Stock Exchange.
The company, which had a 23.5 million-euro debt at the end of last year, reported a 40% business decline in the first quarter of the year and 5.4 million-euro losses, with the major decline of the home appliances market prompting the Flamingo management to give up expansion plans. Flamingo's main shareholders are Dragos Cinca, Flamingo founder, with a 25% stake, and Dan Adamescu, owner of Unirea store, with 17.5%, whilst Alexandru Ion Tiriac, son of businessman Ion Tiriac, holds 5% of the shares.
If the proposition is approved by the general meeting of shareholders, the company's main shareholders, Dragos Cinca and Dan Adamescu would have to subscribe bonds worth around 3 million euros in order to ensure they preserve their current stakes, when the bonds are converted into shares.
Adamescu is one of the Romanian investors that have made acquisitions in the last year, showing they have liquidity available, and can take advantage of the low valuations, as a result of the financial crisis. He also got involved in the management of Flamingo, by appointing his son, Bogdan Alexander Adamescu in the company's Board of Directors. If the other shareholders will not exert their preference right to buy the bonds, Adamescu could even boost his stake in the company. He could not be contacted for comment.
On the other hand, Dragos Cinca has gradually reduced his stake in Flamingo over the last few years, starting with company's listing in 2005, and invested in other businesses. Cinca could not be contacted, either.
The bond issue could be meant for paying part of the debt, with the company having no expansion plans requiring major investments, at least for now. 

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