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(Sharecast News) - Model train set maker Hornby said on Thursday that it was planning to leave the AIM stock market and go private, citing regulatory hurdles and a desire to cut costs.
Hornby said that operating outside of a publicly-quoted environment "would improve its decision-making ability and regulatory hurdles during a period demanding agility and focused execution".
"At the same time, the board is conscious of the limited liquidity of the company's shares on AIM balanced against the regulatory burden and cost of maintaining the public quotation," it said. "Therefore, following an ongoing and in-depth evaluation, the board has concluded that it is in the best interests of the company and its shareholders to seek shareholder approval for the cancellation and re-registration."
Shareholders will vote on the proposed move at a general meeting on 1 April.
Hornby also gave a brief update on trading, saying it remains on track for year-on-year sales growth, despite weaker trading in January and February.
It said temporary shipping delays have also impacted its operations, but these are expected to ease in the coming months.
"Despite these short-term challenges, the company continues to make progress with multiple change initiatives aimed at improving business performance," it said.
"Encouragingly, the new product ranges launched at the beginning of the first financial quarter have been well received, with associated orders up 22% year-on-year, highlighting strong demand and positive customer engagement with the company's brands."
At 0940 GMT, the shares were down 27% at 13.80p.
Russ Mould, investment director at AJ Bell, said: "Hornby's decision to delist from AIM is not a damning criticism of the UK stock market. When two shareholders - Phoenix Asset Management and Frasers - own 91% of the company, it doesn't make sense to be a listed entity.
"Companies admit their shares for public trading to obtain a diverse shareholder base and access capital markets. In Hornby's case, its shareholder base has become incredibly concentrated.
"Hornby has had a tough ride over the years and Phoenix has been an incredibly supportive and patient shareholder. Sometimes a business is better off away from the public markets and that looks to be the case with Hornby."