Delisting last-ditch attempt to rescue Dyson

After more than a year of negotiations with its banks, the 200-year-old company said the complex proposals offer it a vital lifeline.

If shareholders approve the plans, they would be left with only12 per cent of the Sheffield company's equity, with banks Lloyds TSB and Svenska Handelsbanken taking a 51 per cent stake in return for wiping out 35m of Dyson's debt.

If shareholders do not back the delisting and subsequent debt-for-equity swap, Dyson is likely to fall into insolvency, leaving shareholders with nothing.

"It's the only real solution and the fairest solution," said chairman Dr Christopher Honeyborne.

Dyson entered the recession with a heavy debt burden and significant exposure to the slumping automotive industry.

By March last year the group's assets had dropped in value to no more than 5m, from 38.1m a year earlier. Its debt stood at 38.8m a year ago, with much of it unsecured.

Dyson has sold businesses and sites and cut jobs to reduce costs and provide working capital.

Under the new plans, the banks will write off much of their debt in return for a controlling stake, and provide new secured lending facilities.

If the debt-for-equity swap goes ahead, it would follow a similar path to Leeds-based consultancy WYG, which was last year forced to restructure its debts, leaving shareholders with only 15 per cent of its equity.

Dyson said finer details of the restructuring were yet to be thrashed out, but the banks would also be issued with 5m of redeemable preferred shares.

The company's pension fund would receive 33 per cent of Dyson's equity in non-voting shares, and an employee benefit trust would receive the remaining four per cent.

Dyson said delisting was necessary as the capital reorganisation would mean it no longer met stock market rules.

The company, which started life in 1810 with a ceramics factory, would then focus mainly on its Saffil fibre operation. This supplies engineered fibre products into a number of sectors, including iron and steel, and has benefited from a recovery in automotive markets in recent months.

"I have always had a sense of history and I like the idea of it continuing, but it's more than that," said Dr Honeyborne. "This structure that we are proposing is the one that's fairest to the majority of stakeholders."

Dyson's former directors had complained of banks being obstructive over the refinancing, as they tried to extend the company's 45m unsecured credit line. In August, shortly before his departure, finance director Christopher Kinsella claimed the banks had "not been as supportive as we would have expected to a Yorkshire plc".

But Dr Honeyborne said the former directors "underestimated the complexity of the course we were going to have to run".

He said: "It's been a bit of a Grand National course for everybody. We've all had hurdles to cross – it's been difficult for the banks, as it has for the company and shareholders."

Dyson now needs the backing of 75 per cent of votes cast at a meeting on April 26 to proceed with the delisting. This would be followed by another vote on the debt-for-equity swap.

The shares have been suspended since July.

Dr Honeyborne said he is reasonably confident of achieving success at the meeting.

Trouble hit after years of growth

Dyson's origins date from the early 19th Century, when a ceramics factory opened in Sheffield in 1810.

It became a leading producer of refractories and related ceramics products. It floated on the London Stock Exchange in 1958.

After predominantly supplying the steel industry, the group diversified in the 1970s into the general ceramics industry.

In 1999 it bought Saffil, a pioneer in heat-resistant fibres.

It continued with acquisitions over the next decade until the recession hit, forcing it to sell its headquarters in December 2008 for working capital.

Its shares were suspended in July.