Bottom Line: Harmony's cash call creates discord (CORRECTED)

CORRECTION (PUBLISHED 20 MAY 1993) APPENDED TO THIS ARTICLE

SHAREHOLDERS in Harmony Leisure should turn down the chance of subscribing to the company's pounds 1.8m rights issue. In conjunction with the cash call, new management is proposing to purchase, on behalf of Harmony, their own private property assets.

Harmony owns 18 public houses and has lost steadily increasing sums over the past three years. New management - John Main, chairman, and Lewis Davis, director - want to turn Harmony into a property investment and development company. As a first step Mr Main wants Harmony to buy Kewbrook Investments, of which Mr Main owns 50 per cent, and Hoe Properties, which is wholly owned by Mr Davis. Both have been valued by outside firms.

Both men are taking Harmony shares in payment, which gives some reassurance about their commitment. The response of other shareholders to the cash call is not so comforting. Southend Properties, a quoted company of which Mr Main was chairman until recently, is only taking up rights on one-fifth of its 18 per cent stake. Stanley Lever - former Harmony chairman and 23 per cent stakeholder - is getting out altogether.

Mr Main points to his stewardship of Southend as evidence of his abilities to manage Harmony successfully. But neither he nor his close colleagues have experience in pub management.

Harmony, with pounds 3m of debt, has bank support so all the pounds 1.8m rights cash - underwritten by Guinness Mahon - is available for expansion. Doubtless there are many opportunities at bargain prices, but there is still some way to go before the commercial property market recovers.

The rights shares are being offered at 5p, compared with the market price yesterday of 7.5p, down from 8p. In early 1989 they were trading at 70p. Messrs Main and Davis have 3.5 million share options each, exercisable at 6p some time between 1995 and 2000, which gives obvious motivation. Other investors should treat Harmony with caution.

CORRECTION

Southend Property

John Main, the chairman of Harmony Leisure, is also a director of Southend but has never been the property company's chairman, contrary to a report in yesterday's edition.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...