Subsidiary sale gives Baltimore shareholders €3m

THE under siege directors of Baltimore Technologies delivered another €3 million in cash for its divided shareholders yesterday when the former computer security company sold a non-trading subsidiary with tax advantages.

The sale was one of the final steps undertaken by the board in selling off its asset base to generate cash. The subsidiary, Baltimore Technologies Investments Limited, had accumulated tax assets of £99m (€148m). Baltimore declined to name the buyer, which is expected to use the accumulated losses built up in the company to offset against its taxable profits in the future.

Tax assets are technical items recorded in a company’s accounts, that recognise a tax benefit associated with ongoing losses. In normal circumstances, a company that returns to profitability after sustaining substantial losses can use these losses to reduce their tax bill, subject to certain restrictions. But a company that fails to return to profitability will not be liable for tax and cannot make use of these tax credits. Yesterday’s sale will add to Baltimore’s cash pile of about £25m (€35m). The board has pledged to use this money to reinvent Baltimore as an energy business and deliver a return to shareholders. It recently announced plans to buy companies that are active in energy consultancy.

But the board may not survive to implement the new strategy. Baltimore’s major shareholder, Bermuda-based investment vehicle Acquisitor Holdings, has requested an extraordinary general meeting to vote on resolutions to remove the board and replace it with Acquisitor nominees. Acquisitor narrowly failed to unseat the board at a shareholder meeting earlier this month, when motions calling for the removal of chairman Bijan Khezri and chief executive David Weaver were rejected by 50.1% and 50.5% of shareholders, respectively.

Acquisitor, which owns almost 20% of Baltimore, has continued to build up its stake since the meeting and is expected to use its extra votes to force through similar motions later this summer. No date has yet been set for the EGM.