Bottom Line: Holding the baby

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The Independent Online
FOR Robert H Lowe the happy event of Babygro's arrival in August 1988 swiftly turned into a horror story. Like Rosemary's Baby, Babygro was a monster child.

Lowe's pre-tax profits fell in 1989, and it has made losses ever since 1990. With write-offs and exceptional costs, they reached a hair-raising pounds 11.9m, on total turnover of pounds 26.4m, in 1993.

Lowe sold the demon baby to Delta Textiles last summer, for under pounds 4m. But its nightmare is not over.

It has a dividend overhang of pounds 5.8m owing to holders of convertible preference shares.

Even though continuing businesses are trading profitably, it will be many years before this can be paid off.

Shareholders' funds have plummeted from pounds 4.5m at the end of 1992 to just pounds 402,000. Net asset value is less than 0.01p a share. The ordinary shares closed 11 2 p lower at 31 2 p; they are worth almost nothing. Lowe will announce a financial restructuring in May assuming shareholders' approval.

Delta, a subsidiary of an Israeli textiles group, is already a big supplier to Marks and Spencer, one of Babygro's biggest customers, and can afford to invest in the business. Babygro's new parent can - probably - exorcise the demon.