Bank acts to rescue Wembley crisis talk

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The Independent Online
THE Bank of England has stepped in to mediate in the refinancing talks about Wembley plc, the company that owns Wembley stadium, in an attempt to prevent it sliding into receivership.

The Bank's intervention in the long-running Wembley saga came last week when its business finance division hosted a meeting with representatives from Sir Ron Brierley's Guinness Peat Group (GPG) and Wembley's merchant banking advisers, Charterhouse.

GPG owns a blocking stake in the company's preference shares and until the meeting with the Bank it had opposed the proposed deal.

After the meeting GPG decided to give irrevocable undertakings to accept the terms being offered to it as a preference shareholder, thus removing one of the major obstacles to the deal.

However, Wembley, which will post details of the restructuring proposals to its shareholders in the next few days, still has to persuade a majority of the holders of its ordinary shares to accept the terms on offer.

The meeting at the Bank resulted in Wembley increasing the terms being offered to preference shareholders to 30 ordinary shares for every one preference share, valuing the preference shares at 60p instead of the 50p originally on offer. GPG spent around £3m building its stake - and now stands to make a profit of around £1m on its holding.

A GPG spokesman said yesterday that as far back as February GPG had told Wembley that it would not accept the 50p terms on offer. "Those terms simply did not appeal to us at all and we made that clear to Charterhouse. But nothing was done to change them until last week."

The Wembley refinancing talks have been going on now for almost a year. Under the current proposals Wembley hopes to raise £62.5m to reduce its debt to a more manageable £72m. It is doing this through a mixture of raising equity from existing and new shareholders. The banks have agreed to convert £39.2m of debt and other liabilities into equity.

There have been concerns about the fees charged by the banks and the company's advisers during this time. Total fees are expected to exceed £15m, more than the current capitalisation of Wembley.

GPG's acceptance of the preference terms will be a big boost to the company, which has been giving institutional presentations without the presence of Sir Brian Wolfson, who has agreed to move from chairman to deputy chairman after bowing to shareholder pressure.

The presentations have been given by Claes Hultman, the new chairman, Alan Coppin, the chief executive, and Nigel Potter, the finance director.

However, documents given to the institutions show that the company has agreed a two-year package with Sir Brian worth £157,000 a year, plus the use of a company car, private medical insurance and a performance- related bonus.

Under the proposals the number of ordinary shares, currently 250 million, will be increased to an astonishing 5.5 billion. Existing shareholders will be diluted to less than 5 per cent of the company unless they subscribe to their rights shares, which will be priced at 2p each.

The documents also disclose that one of Wembley's subsidiaries, PCC Management Inc, is involved in arbitration proceedings with Moviefone Inc which relates to a joint venture known as Pacer Cats, a US ticketing operation.

Each party, says the documents, "is alleging, inter alia, breach of contract and fraud". The litigation relates to a contract between the two companies to supply ticketing systems to cinemas.