Bottom Line: Attwoods again

YESTERDAY'S hefty provision at Attwoods, the accident-prone waste management company, will have done nothing to dispel the doubtful aura that has surrounded it since a credit crunch forced it to make a deeply discounted rescue rights issue in October 1991.

Since then the share price has underperformed the FT-A All Share index by almost 10 per cent and a series of unfortunate events - like the present indictment of a US subsidiary by a federal grand jury for billing irregularities - has only served to remind British investors why they are not keen shareholders.

It is tempting to criticise Ken Foreman, chairman, and his fellow executives for the Mindis debacle with the benefit of hindsight. But when they bought the company it did not look like such a bad investment. The municipal waste collection business was in its infancy and it seemed good sense to establish a recyclables processing and marketing business if they hoped to win contracts.

But they could not be content with a small business with turnover of only dollars 19.9m. Instead Attwoods built Mindis into a company with turnover of dollars 123m. That is a very brave move in a young market.

What started out as a small gamble became a large one. The company seems to have doubled up as non-ferrous metal prices and industry trends went against it. The result: the disastrous provision and consequent loss, which have underscored Attwoods' dubious reputation.

With loss-making Mindis out of the picture, Attwoods' management can now look ahead and concentrate on growing the business. Mr Foreman's hopes for organic earnings growth of 10 per cent per annum may be optimistic, however, as his European businesses are still mired in recession.

In the abscence of action from the 29.9 per cent shareholder, Laidlaw, the shares will continue to drift. But there could be a bid or a placing of 84.2 million shares on the horizon.

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