IT equipment outfit Redstone has arranged an £8.5 million rescue funding.

Bombed-out IT equipment outfit Redstone has arranged an £8.5 million rescue funding and proposes top-level board changes.

Recently-appointed directors Ian Smith and Tony Weaver, who previously scored a big success with IT services concern Xploite, are set to emerge at the helm of loss-making Redstone, which is placing no fewer than 1.3 billion shares at 0.5p, a 73 per cent disount to yesterday’s AIM price, to raise £6.5 million as part of the refinancing package.

The company, which lost £31 million in the year to March 2009 and another £8.4 million in the six months to last September, is also raising £500,000 through a share subscription at 0.5p and receiving £1.5 million under a 2009 convertible loan note, whose outstanding £4.5 million principal is being converted into new Redstone shares. The final piece of the package is the settlement with yet more new shares of a £2.9 million loan from fellow AIM counter Eckoh, which provided the facility when Redstone bought its Symphony Telecom arm in 2006, and the payment of £500,000 to Eckoh.

Smith and Weaver are putting in £1 million through their vehicle MXC Capital, which will buy a significant portion of the shares issued to Eckoh to settle its loan to Oxfordshire-based Redstone. At the end of the process, Smith and Weaver will jointly hold 15 per cent of the company, whose biggest shareholder will remain Gartmore, with 25.4 per cent.

Provided a special shareholders’ meeting on 8 September approves the proposals, Redstone’s present executive chairman Stephen Yapp will resign from the board and Smith and Weaver, who returned £20 million to investors in their time at Xploite, will become executive chairman and chief executive officer respectively. Redstone warns ‘if the resolutions are not passed, the company would be unlikely to be able to continue to trade’.