Merchant House Group chief executive Chris Day has stepped down from the company with immediate effect.
Merchant House managing director James Keane is assuming the chief executive role. Day will remain on the board of Merchant Capital, the company’s structured products arm.
His departure comes after Merchant House Group posted an operating loss of £1.4m for the first six months of the year and told the market it will need to raise additional funds on top of its recent £2m funding injection.
The company is considering asset or business disposals to shore up its capital, and has not ruled out a sale of its IFA arm Merchant House Financial Services. There is also a risk Merchant House Group will cancel trading on AIM. Merchant House shares have been suspended since mid-April pending the outcome of a financial review.
Merchant House Group announced in June it had secured a £2m funding injection from turnaround investment firm Beia. The final £400,000 of funding from Beia is expected before 22 November but the group said earlier this week “it is clear that additional funds will be required in the short term to provide sufficient working capital and investment in the business”.
Merchant Capital’s UK business was hit after former custodian Pritchard Stockbrokers was suspended by the FSA from regulated activities in February. All £350m of clients’ non-cash assets were transferred to new custodian Reyker Securities in March.
Merchant House made a pre-tax loss of £5.6m for 2011. Merchant House Financial Services reported a £2.4m loss following authorisation delays relating to 120 former advisers from Clarkson Hill, which Merchant House bought from administration in December 2011.
Equilibrium Asset Management investment manager Mike Deverell says: “It may be that Chris Day has taken the bullet for the company’s past performance. If Merchant House is needing all these capital injections, plus the loss, then all is clearly not well. The advisers are bound to be worried and may already be on the lookout for new jobs.”