Irish entrepreneur and promoter Vince Power’s second dalliance with London’s stock market appears headed to the wayside as his year-old Music Festivals company is on the verge of calling in the administrators.
A month ago the company behind such major festival’s as Spain’s Benicassim and the UK’s Hop Farm warned shareholders that this year it will make “a material loss” and was “exploring ways of raising additional working capital.”
It now seems Music Festivals has given up on drawing further funds from the market, which is a blow for investors that took a punt when the company floated a year ago with a market value around £10 million ($16.2 million).
A Sept. 24 company statement said: “The board of Music Festivals has resolved to appoint an administrator and once that appointment has been agreed a further announcement will be made in due course.”
The initial profit warning drove the share price down by one-third from the initial public offering of 65 pence to 42.5.
Trading was suspended on the Alternative Investment Market Sept. 21, after the company’s share price plummeted to 2.12 pence and dropped its market capitalization to about £310,000.
Power is believed to hold around 23 percent of the stock and his family’s stake would take that up to 40 percent. Along with others who backed the company, they look to have lost 96 percent of their money.
In July, Power tried to prop up the company with an unsecured loan of £750,000 ($1.2 million), which was apparently to keep the doors open until fresh capital could be found.
There’s been no further comment from Power’s office, although it’s likely any creditors will want to know where they stand and an administrator may need to be appointed within seven days.
Music Festivals’ failure is being blamed on a crowded calendar and poor weather hitting sales at the UK events, while Benicassim and new Spanish rock fest Costa de Fuego were hit by the country’s parlous economic situation.
A year ago floating the company saw the departure of former Music Festival stakeholders such as top UK promoter Denis Desmond and the Workers Beer Company, who both used it to cash in their shares.
At press time it wasn’t possible to discover if either party was interested in buying back into the company.
Power has had a topsy-turvy relationship with London’s moneymen since he floated Mean Fiddler on the Alternative Investment Market in 2001.
In 2004, in a move the financial pages described as “bizarre” and “chaotic,” he was reinstated as company chairman only days after he quit the position.
New chief execi Dean James hadn’t completed a week in his new post.
“Life is back to normal at Mean Fiddler with Power in the driving seat," a company spokesman told BBC News Online.
However, the city didn't seem to grasp Mean Fiddler’s take on normality: The shares dropped 11p to 42.5p, wiping out more than 20 percent of the company’s value.
A year later he sold Mean Fiddler for £39 million to a partnership between Desmond and Live Nation.