Activist investor Crystal Amber is set to almost double its stake in De La Rue just days after the struggling British banknote maker warned that there was “significant doubt” over its future.

UK-based Crystal Amber quietly has amassed a stake of nearly 14 per cent in De La Rue, according to a person familiar with the situation, a sharp increase from its previously disclosed position at 7 per cent of the company’s stock.

In what will be taken as a sign of confidence in the group, the move will put Crystal Amber alongside US investment group Brandes as the biggest shareholder in the company.

Shares in De La Rue, which prints British banknotes, crashed to an all-time low of £1.33 last week after the company warned that there was “material uncertainty” over its future as it swung to a £12m loss. 

By Friday, shares had recovered some of the losses to trade at about £1.45, reflecting a market capitalisation of just £150m, but still almost two-thirds lower following a string of setbacks over the past 12 months. 

After losing the contract to print the UK’s post-Brexit passports last year, the company warned on profits twice this year before last week’s announcement. Falling earnings and rising debt have stretched the company’s balance sheet. That has left it close to the limits allowed under its loan facilities, which, if breached, could force the company to repay the debt.

Crystal Amber has held discussions with the company’s new management over the past week, according to the person, who said that the team so far had been met with approval for a “common sense” approach to fixing the problems facing the company. Crystal Amber declined to comment.

Richard Bernstein, chief executive of Crystal Amber, had been highly critical of the company’s previous management, many of whom have now left the group. Crystal Amber has held shares in the company since 2017.

Martin Sutherland, chief executive of De La Rue since 2014, and chairman Philip Rogerson both left the company last month. Kevin Loosemore, chair of software business Micro Focus, and turnround specialist Clive Vacher have been brought in as a last-ditch attempt to revive the ailing banknote printer. Mr Vacher and company secretary Ed Peppiatt have also acquired shares in the company in recent days. 

De La Rue’s latest struggles have been caused by the breakdown of a lucrative contract printing banknotes for Venezuela, which needed far more notes than it could print itself because of a period of hyperinflation. However sanctions against Venezuela have left the country unable to pay banknote suppliers — including De La Rue — and left the company and its competitors running printworks below capacity.

The demand slump has further increased competition in the industry on prices, driving down margins. 

The company is also facing a Serious Fraud Office investigation into possible corruption in South Sudan, where it won the contract to print the country’s banknotes. De La Rue has said it is too early to put an estimate on any potential liabilities arising from the investigation.

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