Troubled telematics company, Minor Planet is attempting to raise £3.25m after reaching an agreement with its lenders and HMRC.

The self-proclaimed ‘founder of the UK telematics industry’ suffered from a sharp decline in turnover resulting in “substantial losses” last year.

It made a £2.5m loss in the six months to the end of February this year.

“As a result of the losses incurred by the company, creditors have been inevitably stretched as cash resources have come under pressure in the period,” it said in statement to shareholders.

“In addition, the directors believe that as a consequence of the group's losses coupled with the negative economic outlook and adverse publicity, a number of its customers have chosen to cancel or defer orders with the company.”

The refinancing means it will place over 3.8m new shares onto the market, which it hopes will raise £1.05m in extra capital.

It will also place an open offer of approximately £2.1m worth of new shares open to all existing shareholders and will consolidate existing shares so 20 shares valued at 1p will be consolidated into a single share worth 20p.

The telematics company has also agreed new block discounting facilities with Siemens Financial Services Limited and ING Lease (UK) in the sum of £400,000 for the purposes of providing additional working capital.

It has also converted its existing £750,000 bank overdraft facility to an Enterprise Finance Guarantee Loan.

Finally, it has reached an agreement with HMRC in respect of sums currently due and owing.

The company has accumulated a “significant balance of overdue PAYE, National Insurance and VAT payments” over the last nine months.

Following completion of the refinancing, Minor Planet has agreed with HMRC to repay its outstanding arrears in instalments by 31 August 2010.

"Established in 1996, Minorplanet is the founding father of the telematics industry in the UK,” Terry Donovan, chief executive said.

"The refinancing will allow us to ride the current economic storm and continue to build a platform for growth, targeting the large corporate sector as well as servicing our traditional SME customer base.

"The medium term prospects of the company remain healthy and we should be well positioned to take advantage of the upturn when it happens."

The company is planning to increase its penetration of the larger corporate market in both the public and private sectors.

It said recent enhancements to its hardware and software have made its products “highly attractive to larger fleet operators who, inevitably in the current economic climate, are focusing on tangible opportunities for cost reduction and improved efficiencies”.

It is also planning to open up its software to other hardware providers, as well as embedding the company's software with other back office systems through increased use of the application programming interface.

“This strategy is already proving successful with a number of key new private sector gains in this market,” it said.

However, the group's immediate priority is to “cope with the current unprecedented economic pressures”.