News

API Group, which produces foils and laminates for the packaging industry, expects to breach its current UK banking facility limits in November after identifying a cashflow shortfall in its UK operations.

The company is examining how best to resolve the problem, and financial support from one of its largest shareholders is among the options under consideration.

API recorded a £2.1m loss in the six months to 31 March, following a "disappointing" 2006 that revealed a slump in its European business.

In Europe, growth in the laminates sector was offset by reduced demand for metallic foils and pigments, partly due to difficulties with Chinese imports. But API said at the time it was "optimistic" that performance in Europe would improve once the issue was settled.

The company has built a new foil production facility in China, which accounts for half its capacity. It has also restructured its laminates operation.

But chief executive David Walton resigned in August and API's share price has fallen by 16% since June.