Sherwood seeks capital by MBO

Sherwood International is looking into a management buy-out.

The IT business revealed it was in preliminary financing talks that could lead to an offer at between 105p and 110p a share.

Chief executive Mike Shinya said he was exploring alternative ways of raising capital for expansion, including a rights issue and raising private equity.

"The intuitive, natural route that all of us would instinctively look to would be our shareholders for support in a rights issue," he said.

But the depressed markets particularly for technology stocks made this approach difficult, he said.

"Gaining critical mass is the vision," he said.

"I would like to see the business double the size that it is now."

Sherwood's stock has been climbing since mid-March and was trading at 102.5p on Tuesday morning, when the announcement was made.

It dipped in response to a downbeat trading update in February.

This week's announcement included a warning that 2003 results would be more heavily weighted to the second half, particularly if any significant licence sales are deferred over the next two months.

Sherwood is advised by Close Brothers Corporate Finance.

It reported a profit before tax of £94,000 on a turnover of £52m last month, up from a loss in 2001 of £11m and a turnover 8% higher at £56.5m.