Companies: ASF    ASTO   

London Fire Brigade supplier John Shannon’s Assetco has agreed an £80 million reversal into emergency services supplier Asfare.

Under the deal, AIM-quoted Asfare is to acquire Assetco, bought out by Shannon and backers in 2005 from the private Brook Henderson group, by issuing £70.2 million of shares and paying £10 million cash to Brook Henderson for Assetco’s preference shares. Southampton-based Asfare has also raised £20 million in a placing at 145p and has appointed Hoare Govett as nominated adviser.

The plan is for Shannon and Frank Flynn, Assetco’s finance chief, to become chief executive officer and chief finance officer respectively of the enlarged group, which will be renamed Assetco. Tony O’Neill and Tim O’Connor, current holders of those posts at Asfare, will resign from the board.

Assetco, which began life as a leasing spin-off from British Gas and has now disposed of most of the fleet management contracts acquired with the buyout from Brook Henderson, made £1.3 million pre-tax on £53 million revenues in the six months to last September. Six years ago, the company, a UK leader in its field, won a 20-year outsourced emergency services contract with the London Fire Brigade with estimated revenues of £400 million over the life of the contract, and last year the company won a £60 million 20-year managed services contract with Lincoln Fire Brigade.

Asfare turned a £401,000 loss on £4.4 million turnover in the year to March 2004 into a £358,000 pre-tax profit on £4.9 million turnover in 2005-06. After the deal, Shannon will hold 40 per cent and Flynn ten per cent of the enlarged Assetco, whose directors forecast combined profit before tax and amortisation of £6.2 million for the year ending this month on £103.2 million turnover.

Shares in Asfare, floated at £1 in late 2003, have more than doubled from last May’s 71p to 155p, valuing the company pre-reversal at £7.7 million.