Alas, Signet rebels' plan is a pile of old Ratners

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The Independent Online
SELLAFIELD will always be Windscale to me. And Signet Group will always be Ratners, however much the company tries to expunge its old name and humiliating past from the public consciousness. Its extraordinary general meeting this Friday promises to be a lively affair, though perhaps not as colourful as the truly extraordinary meeting three years ago when furious shareholders bayed for the blood of Gerald Ratner, who was then still in charge despite denigrating some of the merchandise as "total crap".

Rebel preference shareholders have tabled a resolution demanding that the group seek out potential purchasers of the operating businesses. In effect, they want the jewellery group broken up and the proceeds divvied up. You can understand their frustration. Signet stopped paying dividends on the prefs years ago. The unpaid interest amounts to £130m and continues to accrue at the horrifying rate of £100,000 a day.

The idea has surface attractions. It would only be adopted if Signet could get more than £700m for its businesses. Ordinary shareholders, who rank behind the banks (owed £350m) and preference shareholders (owed £454m) would get 20p per share plus 20 per cent of any proceeds over £800m. In effect the pref shareholders would be waiving up to £150m.

The one big flaw is that Signet wouldn't get £700m for its assets. That's the view of John Richards, the top-rated stores analyst at NatWest Securities, who reckons any break-up of the UK businesses would be the kiss of death for Signet.

Jim McAdam, Signet's chairman, says the proposal amounts to an eight- week public fire sale. That would damage relations with suppliers and certainly wouldn't help to elicit a top price.

My soundings suggest McAdam will comfortably win this battle. Institutions holding the ordinary shares are not about to vote against the management which steered the business back from the brink. And the preference shareholders only account for 29 per cent of the votes. However, if the episode concentrates minds a bit more on reconstructing the absurd balance sheet, so much the better. Meanwhile, preference shareholders who are too impatient to sit things out can always sell in the market.

Time runs out for Lloyd's

WILLIAM GLEESON'S story in this paper last week that Lloyd's might have to close caused quite a stir. The beleaguered insurance market brought forward its annual statement and David Rowland, the Lloyd's chairman, spent half the week in TV studios trying to calm market fears. He did enough stonewalling to qualify as a Cabinet minister. But he has yet to address the central plank of our story. This is that Lloyd's looks set to fail its crucial solvency test in August 1996. It cannot trade beyond 1 January if it believes it will fail that test. It therefore needs a credible rescue plan in place ahead of its annual round of capital-raising this autumn.

However, as our story today makes clear, the problem is now looking even more urgent. It is not only a solvency problem that the market faces, it is a cash shortfall, too. With creative accountancy Lloyd's might somehow be able to pass that solvency test. But with cash you either have it, or you don't. And it appears Lloyd's and its syndicates don't.

N&P eyes its suitors

ABBEY NATIONAL has shoved a rocket under the posterior of the National & Provincial Building Society. By going public on its desire to take over the N&P, Abbey has pressed the start button on a process ineluctably leading to the end of N&P's life as an independent building society. Even Alastair Lyons, the N&P chief executive, recognises that it is unlikely to survive long in its present form.

The fascinating question is whether he yields to Abbey or finds an alternative bidder elsewhere, either in the building society movement or, more likely, outside it. Royal Bank of Scotland, BAT Industries and the TSB are all waiting in the wings.

Abbey has made clear it is prepared to pay a lot more than the £650m it offered last time - as we reveal today on page 1 of this section.

Though not super-efficient, N&P has its attractions. Its three million customers are not to be sneezed at. And - if you believe the increasingly apocalyptic forecasts about the future of traditional mortgage lending - it is, at least, well diversified. Credit cards, travel insurance, share dealing, life assurance - you name it, N&P is in there. There is every sign of an unofficial auction developing. N&P members should sit back and enjoy the ride.

It's a watchdog's life SIR Bryan Carsberg is going out with a bang, not a whimper. The director- general of the Office of Fair Trading, who leaves the job in three weeks, has had a busy week. On Thursday he referred electrical goods suppliers to the Monopolies & Mergers Commission. On Friday he published a damning report on the mis-selling of endowment mortgages (see page 9). And next week he is expected to make his recommendations on allegedly anti-competitive supply arrangements in the beer industry.

You might think from all this activity that our competition watchdog was in fine fettle. Far fom it. Sir Bryan has spent a frustrating three years at the OFT, either being ignored by government or, worse, having his recommendations overruled.

Most recently Michael Heseltine overturned his recommendation that the MMC should investigate the £50m purchase of Waddington's Games by Hasbro. It was entirely appropriate that the world's biggest toy company should want to buy the maker of "Monopoly", and all too predictable that Mr Heseltine should allow it to do so.

Competition policy is in a dismal state. Three bodies - the OFT, the MMC and the DTI - police anti-competitive behaviour when one would do the job better. And there is no system of fines to clobber cartels, predatory pricers and other restrictive trading arrangements. Companies deemed to have acted improperly are merely told to desist.

Sir Bryan has clearly had enough of trying to fight the competition rogues armed with nothing more than a limp stick. He is quitting two years early. The fact that no successor has been announced with just three weeks to go suggests it hasn't been easy finding a good replacement. Mr Heseltine has had five months to recruit somebody. He is said to favour a DG with a business background. The salary of £110,000 may put off some business candidates. But the real problem is that the OFT is increasingly becoming a non-job. The regulators with real power and real challenges are the industry-specific watchdogs such as Oftel, Ofgas and Offer.