Anglo United forced into new refinancing

ANGLO UNITED, the smokeless fuel company, has been forced into its second refinancing in six months because of heavy first-half losses and a paucity of buyers for its unwanted businesses.

The company yesterday revealed it was in discussions with its banking syndicate to refinance a pounds 250m loan burden with a partial equity-for-debt swap.

The move was accompanied by a pounds 22.7m taxable loss for the half year to 30 September against a pounds 3m profit last year, on turnover down from pounds 270m to pounds 244m. The interim dividend has been passed.

The group proposes to cut its debt to a core figure of pounds 130m. Interest charges on a further pounds 50m of loans would be deferred on new terms and its banks would convert about pounds 70m of debt to equity. In addition, existing preference shareholders would convert their paper to new ordinary shares.

The proposals, which require shareholders' approval, will result in ordinary investors being diluted to a 36 per cent interest in the company. They are also unlikely to receive a dividend until the bank debts are paid.

Anglo blamed the refinancing on a severely depressed economy and high unused stocks held by customers due to mild weather earlier this year.

Moreover, the group failed to dispose of its remaining non-core activities due to low prices demanded by potential buyers. It had hoped to raise about pounds 50m from the disposals.

Group operating profits slumped from pounds 13.4m to pounds 4.9m due to lower contributions from solid fuel manufacturing and distribution, liquid fuel and chemicals and other businesses.

There was an exceptional loss of pounds 11.2m against a pounds 5.7m profit in the previous year, reflecting the pounds 7m cost of its first bank restructuring, disposal costs and bad debts.

These were only partly offset by pounds 2.7m profits on the disposal of its sheep farms in the Falkland Islands and a pounds 2m gain on property sales. The group incurred a pounds 16.3m bill on its debts in the first half, down from pounds 16.6m.

The loss per share amounted to pounds 7.1p against earnings of 1.3p last time. David McErlain, chairman, said: 'The combination of depressed trading and the inability to raise funds through disposals has inevitably led us to fall short of our rescheduled debt and interest payments to our banks.

'With little prospect of any dramatic improvement in the UK economy, it became clear that further piecemeal adjustment to our banking arrangements would be insufficient and that a more fundamental restructuring would be required,' he said.