Sevco crisis accelerates as share price tumbles

Sevco’s share price is tumbling despite the current board seeing off the rebel challenge at last month’s AGM.

A year after touching a high of 90p it emerged yesterday that on January 3 a total of 310,000 shares were sold for just 28p on January 3.

The late notification of that transaction has added to speculation that the share price is likely to fall further despite the overwhelming backing of the controlling Easdale axis at the AGM.

Small volumes of shares are regularly traded but the sale of 310,000 at a discount of more than 10% of the current price is bound to accelerate concerns among the investors who splashed out 70p per share in December 2012.

Those shares are now worth much less than half of the price paid for them with no sign of an upturn following the AGM which was supposed to end the in-fighting at the troubled club.

A PR charm offensive in the lead up to the vote killed off the prospects of the rebels with new CE Graham Wallace portrayed as the man to lead the club to the promised land since he had been involved with Manchester City as the club announced the biggest ever losses in football.

At the AGM Wallace was highly critical of the clubs’ cost base which he claimed was too high for the top division never mind the third tier of Scottish football.

That statement was expected to be the forerunner for extensive cuts in the playing budget but with one week gone in the January transfer window there has been no action to back up those comments.

Cutting footballing costs is notoriously difficult to achieve with players contracts virtually untouchable. None of the big earners at the club are out of contract at the end of the season with stars like Ian Black, Dean Shields, Nicky Law and Dick Foster still having more than two years left on their current deals.

The first team management team are believed to be costing the club upwards of £1.2m per year.

With no word of cost cutting plans being put in place it is likely that the share price will slip further making further investment highly unlikely.

Investing in a company that has seen the value of its balance sheet halved 12 months after going to the AIM will be near impossible.

With a growing number of supporters critical of the board it will take a major action plan to reassure investors that the slide in the share value isn’t about to accelerate further.