It seems like every week another tale of woe is unveiled by one of the Irish small-cap companies. This week it was the turn of Barlo to give its long-suffering shareholders lots of unpleasant news - not least the fact they are to get no interim dividend with little likelihood of a resumption of payout for at least a year.

This is the first time in nine years that Barlo has been forced to skip a dividend payment.

Barlo's trading in the half-year was awful but the most worrying aspect of the Barlo figures is the state of the group's balance sheet, where net debt at the end of the half-year rose to €143.7 million (£113 million).

This represents gearing of 121 per cent while interest charges in the half-year were covered just 1.5 times by operating profits. That sort of interest cover is razor thin and shows that Barlo is walking a financial tightrope.

It was hardly surprising then that Tony Mullins tried to reassure his shareholders when he said that the group enjoyed the continued support of its banks.

Interest and debt repayments will be made as they fall due and Barlo has sufficient funding for its requirements. But that continued support from the banks seems to have come at the expense of revised banking covenants, although Barlo does not provide any detail of the changes that have been made to the terms of its bank loans.

Quite often, companies in Barlo's state are seen as a decent recovery bet. But Barlo will have to show more concrete signs of getting its house in order before anybody should contemplate putting money into the shares.

The company will need to show clear evidence that enough cash is being generated to reduce the enormous debt load, its restructuring is having the desired effect and that its overall trading is improving.

No doubt those lucky people who sold Athlone Extrusions to Barlo for €56 million 12 months ago are glad they took hard cash instead of Barlo shares.

If they had looked for Barlo paper instead of cash those shares would by now have lost almost 80 per cent of their value.

For Barlo shareholders, there is the unpleasant knowledge that the €56 million cash they paid to Athlone Extrusions shareholders accounts for almost 40 per cent of Barlo's current debt load!