Tempo Services Limited

This contract cleaning and services company has announced the appointment of a new CEO. Founder John Schaeffer has handed the reins to Craig Higgins, who was the company’s chief financial officer for the six years following its 1994 sharemarket listing. The announcement also revealed that a group of professional investors have kicked in $14m to help Tempo over what has obviously become a cash crisis (see our reviews on pages 10 and 15 of issue 150/Apr 04). In our opinion, the money has been raised on very unfavourable terms for existing owners. The investors have received convertible notes paying an interest rate of 9.75% per year and have the right to convert their notes into ordinary Tempo shares in five years’ time, at 90 cents each. A fairer solution would have been to make an offer to all shareholders but it seems the cash was needed in a hurry. It reminds us a little of the dilutionary issues made by bombed-out retailer Strathfield in its darkest days. The stock is up a little since issue 153/Jun 04 (Sell—$0.99) and we wouldn’t advise getting involved at this point. AVOID.