Mackie International is in advanced negotiations to purchase a UK-based engineering group. Shares in the Belfast-based textile engineering firm have been suspended pending the completion of a major acquisition and a capital reorganisation at the group.

Chief executive, Mr Sul Sahota, said the proposed acquisition was a reasonable size and should have a material impact on the group. Mackie International hopes to be in a position to issue a circular to shareholders with details on the acquisition and restructuring within the next two weeks, he said.

"Shareholders will be kept informed of progress in these areas and a further announcement will be made as soon as is practicable." The directors have stated they believe the acquisition and capital reorganisation are necessary to build a firm foundation for the future of the group.

Mackie International also issued half-year results to the end of June last, reporting an improvement in its underlying trading position. In the six months, the company recorded pre-tax losses of £1.9 million sterling (£2.1 million) on turnover of £8.9 million sterling (£10 million). This compares with pre-tax losses of £5.4 million sterling in the same period last year. Much of the improvement is due to the continued focus on implementing cost reduction and efficiency improvement initiatives.

Mr Sahota said production has progressively improved since June, and is achieving more output out of its foundry. He insists he is still optimistic the company will be able to turn a profit before the end of the year but stressed the benefits of the recent re-organisation of Mackie may not be fully felt until 1999.

Group borrowings increased by £800,000 sterling since December 1997 to £17 million at the end of June and have risen further over the successive months. But it warned that while the group continues to operate within the facilities agreed by its bankers, the headroom available to Mackie is limited and the nature of its business is such that there can be considerable unpredictable variations in the timing of cash flows.

No dividend will be paid to shareholders for the six-month period to the end of June.

The construction of the new Springvale Foundry has now been commissioned and has made good progress over the summer in raising output and is now serving its customers.

Since June, Mackie has reached agreement with a third party to transfer up to £3 million sterling of annual casting sales on a commission basis to the foundry. This will begin next month and is scheduled for completion by the end of February 1999.