Newport Networks, another VoIP Gem

Talk of placing for Newport scares investors

Neil Hume
Wednesday December 21, 2005
The Guardian
Newport Networks Group, the telecoms equipment supplier founded and chaired by the Welsh billionaire Sir Terry Matthews, dropped to an all-time low yesterday amid talk that it was set to return to the market for more cash.
Traders believe Newport is trying to raise £15m via a placing and open offer pitched at 25p a share. The proceeds will be used to increase production. Newport is focused on the fast-growing internet telephony market and over the past few months it has announced several contract wins and distribution deals.
However, the size of the fundraising is likely to come as something of a surprise to shareholders. Newport, which had £9m in the bank at the end of August, is valued at just £18m. In order to sugar the pill, dealers reckon that any share-placing is likely to be accompanied by a contract win.
Newport raised £27m when it came to market in May 2004 at 71p. It received an enthusiastic reception from City investors keen to back Sir Terry, who made a fortune when he sold Newbridge Networks to Alcatel for $7bn (£4bn) in February 2000.
The shares hit 150p in April but have been under pressure ever since. They fell sharply in September after the company warned that sales would fall short of expectations in 2005. Newport closed 1p lower at 27.5p last night.