PLATFORM: 'Remember IWP International? That was the financially ill industrial company, headed by entrepreneur Joe Moran, before it was taken over and privatised by venture capitalists a year ago.

Now it is looking for fresh funds from its existing shareholders to tide it over. To execute this funding legally it has called an extraordinary general meeting, to be held in Dublin next week, to approve the necessary resolutions. Normally this sort of event would warrant limited interest as venture capitalists invariably end up controlling all the shares, but not so with IWP.

It has ended up with minority shareholders, most of whom are about to be squeezed. The letter to shareholders asking for approval for the placing of new shares to raise €13.5 million unequivocally gives them this stark message.

"It is intended that in addition to qualified investors, the private placement will be limited to those investors who, as a result of their current holdings in the company would, on a pro-rata basis, be entitled to invest or subscribe a minimum of €50,000 for new shares in IWP, so avoiding the need for the publication of a prospectus which would be both costly and time-consuming for the company."

It could be tempting to sympathise with the company's concerns about minimising costs but that should not impinge on the underlying value of the small shareholders.

In effect, the larger shareholders are being given superior rights; the smaller shareholders will see their holdings diluted with the placing of shares comprising between 25 per cent and 35 per cent of the enlarged share capital. That's pretty shoddy, isn't it?

When IWP was flying high it had about 3,500 shareholders. This was whittled down to some 450 after the takeover. However, it is understood that fewer than 50 of these will qualify to participate in the placing while in sharp contrast, the vast bulk will not. With venture capitalists holding the bulk of the votes - the largest is Strategic Value Partners - IWP makes the obvious remark that its two largest institutions will be supporting the placing, so the little shareholders will be left out in the cold.

Without a prospectus with the mandatory financial information and not having the audited results for the year ended March 31st, 2007 - IWP merely says they will be "scheduled in the next several months" - it is not possible to make a judgment on the merits or demerits of the placing. However, with the venture capitalists in the saddle, it will have to be potentially favourable to them and thereby unfavourable for those with a placing entitlement for under €50,000.

So without the necessary financial data, is it possible to have a stab at IWP's prospects? The restructuring appears to be rolling along in the right direction.

* The transfer of the UK businesses Fine Fragrances to Vivalis in Skelmersdale (where IWP's corporate headquarters has been relocated with overhead reductions) has been substantially completed and the planned outsourcing of the Vivalis production to a lower cost producer should bring large savings.

* The retail operation in Poland, Polbita, has had the most potential with that country's entry into the EU sanctum. It plans to augment the number of stores over the next two to three years.

* It has sold the Royal Sanders companies and the Van Gils business operated by Fine Fragrances at what the IWP calls "satisfactory overall terms". It is remiss of IWP not to disclose the consideration.

IWP's latest sketchy preliminary results to March 31st show a disimprovement from an operating profit before goodwill of €2.1 million to a loss of €6.7 million and an increase in the net debt from €54.9 million to €72.4 million.

With these sorts of figures it is easy to understand the group's view that additional borrowings - the alternative means of raising capital - "are unlikely to be available on acceptable terms . . . and would leave the company overleveraged". That however does not excuse it from treating different- sized shareholders in such diverse ways.

Seasoned investors know well the main pitfalls in being locked in as minority shareholders; mainly uncertainty, lack of or non-existing marketability in the shares, and a possible uploading of charges by venture capitalists or their associates.

Restructuring firm Kroll Talbot Hughes, which oversaw a major restructuring at IWP was paid €2.1 million in 2006. It received £75,000 (€112,000), a monthly retainer fee and "any reasonable expenses" for Alex Sorokin, a partner in Kroll but also IWP's chief executive. According to a report earlier this year fees of €1 million were paid for the restructuring, the benchmarks for which had not been agreed for inclusion in the takeover document posted to shareholders last year.

While Joe Moran with his 11 million shares, along with his fellow directors and most other shareholders, accepted the token cash offer of 3.5 cents a share last year, the braver 400 plus, numerically very strong (more than 80 per cent of the total) but with a paucity of votes, decided to give it a whirl.

Regrettably, as a unit, they probably won't register their rejection of the proposed utterly inequitable placing at noon on Tuesday, at the Radisson Hotel, Dublin airport, but as individuals, they should, for the record.