Small talk: MKM stays silent about its sea of troubles

Volex debt agony; Approval for Sinclair; Nyati float pulled

Investors Are increasingly worried about the silence from MKM, the promotions business and front-runner for the award for most disastrous float of the past year.

Investors Are increasingly worried about the silence from MKM, the promotions business and front-runner for the award for most disastrous float of the past year.

The company warned in January that it has plunged into the red because of a disastrous "cruises for £10" newspaper offer. It blamed the disruption of the hurricane season for being unable to fulfil promises of Caribbean cruises last autumn, and has lost large sums on the alternative bookings in Europe and South America. MKM expected to make a profit when the Daily Express readers upgraded their tickets to take friends and relations with them at full price - but it seems the deal attracted more singletons than usual.

Worst of all, the damage to MKM's reputation has been significant, with the company making its second appearance on the BBC's Watchdog programme in as many years. (It also messed up a "free flights" offer used by BT and the AA, which ended up with a TV dressing-down and criticism by the Advertising Standards Authority.)

Sources in the promotions industry have heard MKM is cutting costs and struggling to win new business, while investors are alarmed that there has been no further word on the scale of the losses or on the dispute with the Daily Express. The January update said only: "A further statement will be issued when the board is in a position to quantify the impact of these events on the company."

MKM was set up by, and is run by, the brothers Mark and Victor Koch, and was briefly owned by the British Airways subsidiary AirMiles. The company came to AIM having raised £1.4m last June and until the company's next statement it remains unclear how much cash might be left.

The Kochs made £1m from selling shares at the float at 44p - a level not seen since the end of July. Many investors appear to have given up on the stock, selling out to crystallise some useful tax losses before the end of the tax year and pushing the shares down to 12.5p at the close on Friday.

Volex debt agony

The Board of Volex, the copper wiring business, and its investors must be ruing the company's decision last year to turn down plans for a £10m equity fund raising. The company is between a rock and a very hard place indeed because of the need to refinance its £33m of bank debt before July. The business has put itself up for sale in the desperate hope of attracting a trade buyer to safeguard the jobs of at least some of its 8,000-plus employees in 20 countries. Volex shares surged last week as a hedge fund, Cycladic Capital Management, took a 6 per cent stake. But the company's future is far from assured. Its banks are demanding a high price in increased interest rates for extending the overdraft, and major shareholders are furious a fire sale of assets may be necessary as a result. One investor said: "Shareholders are extremely supportive of this international business, but we want the banks to take a longer-term view and to stop screwing British industry."

Approval for Sinclair

Sinclair Pharma, the Godalming-based healthcare firm specialising in skincare, has won European permission to launch its latest skin cream, taking its portfolio of approved products to 12. Sebclair treats red flaky skin caused by the condition seborrheic dermatitis and its launch will be piloted in Italy as an early test of the salesforce Sinclair acquired with its purchase of Euroderm last year.

Nyati float pulled

Small Talk wrote last week on the deluge of cash shells coming to AIM to beat new minimum-funding rules which came into force on Friday. We warned that not all would make it in time, and one in particular did fall before the final fence: Nyati Resources. Nyati is chaired by Brian Moritz, the serial director, who has yet another venture - European Business Jets, which flies and sells part-ownership of jets for businessmen - floating on AIM today.

The problem for Nyati, we are told, was not with the cash shell itself, but with the deal it had lined up to do shortly after listing. The deal would have been a "related party transaction" because of the interest of Brian Hughes, Nyati's proposed chief executive, in the South African methane project at the centre of the deal. Numerica, Nyati's advisers, had reservations about the structure of the deal which delayed agreement, pushed the date of the float into the new regime (when Nyati would have had to raise three times the £1m it originally planned) and triggered the collapse of the whole venture.

It shows that Numerica is no pushover as an adviser, a fact which ought to give heart to investors in White Nile, anxiously awaiting the delayed return of its shares from suspension. White Nile, where Mr Moritz is the sole non-executive, appointed Numerica to supervise publication of details of its contested acquisition of oil exploration rights in Sudan.