Kingswood drops after discounted take-private proposal from majority shareholder

(Sharecast News) - Shares in Kingswood Holdings tumbled on Wednesday after a heavily discounted takeover proposal from its majority shareholder, with the financial advice firm now out of options before it runs out of cash by the end of the month. HSQ Investments, which already owns 68.4% of Kingswood and has provided up to £80m in growth equity capital since its initial investment in 2019, has proposed buying the company at a price of just 7p per share.

That's down from Tuesday's closing price of 8.5p and well below the 12-13p level seen last summer, causing the stock to drop 12.9% to 7.4p in morning trade.

The share price has tanked over recent months as operations have been impacted by sector-wide headwinds, while Kingswood's acquisition strategy has resulted in a big ramp up of debt over the past two years.

The company, which had a net cash position of £39.7m two years ago, finished 2024 with £90.7m in gross debt and loans combined, including those provided by HSQ.

Now, imminent obligations well exceed the current cash balance available, meaning that - without further external financial support - Kingswood would not be able to meet its payments by the end of March.

"HSQ has confirmed that they continue to be supportive of the business but believe that this is most appropriate from a position as sole institutional shareholder alongside the company moving to an unlisted, private company setting and therefore they have stated that they would be willing to provide the required near-term funding only on this basis," Kingswood said in a statement.

"The Kingswood independent directors are strongly of the view that there is no other near term credible alternative to the company other than the continued financial support from HSQ."