Pumpkin Patch says nothing certain after talk of approaches sends stock soaring
Pumpkin Patch, whose shares soared on Friday after the children's clothing retailer announced it was seeking proposals to acquire or refinance the company, said today that it was too soon to predict an outcome or what value any proposal would put on the company.
The shares jumped 33 percent to a four-month high 28 cents on Friday after the retailer said it was seeking formal proposals after "certain third parties have proactively indicated their interest in Pumpkin Patch". The company, which was at risk of breaching banking covenants, last year hired Goldman Sachs to advise on a capital review, announced at the annual meeting in November
The board "notes that there has been significant upwards movement in the share price" since the announcement on Friday, it said in a statement to the NZX. "The process of seeking formal proposals in respect of either an acquisition of the company or recapitalisation has only just commenced and no conclusions should be drawn at this stage concerning whether any transaction would result or whether the value of any transaction would be more or less than the market price prior to the release of Friday's announcement."
Pumpkin Patch shares had shed about two third of their value in the past year. Friday's announcement came with the release of first-half results which showed an improvement in earnings to $749,000 from $106,000, as sales rose 2.2 percent to $121.9 million.
Earnings in the six months ended Jan. 31 included restructuring costs of $743,000 after the company embarked on a strategic review in a bid to lift its performance, focusing on its store footprint, stock levels, and an IT system upgrade. A reorganisation of its stores, mostly in Australia, will see it shuttering nine outlets in the second half of this year, it said.