Bottom Line: Hope grows for BM

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The Independent Online
BM GROUP, the construction equipment company struggling for survival under a suffocating debt burden, took one step nearer financial stability yesterday with the disposal of a US subsidiary.

The sale of Linder, which distributes industrial machinery in Florida, raises pounds 9m. Not a lot in itself, but with proceeds from other disposals since August BM has garnered more than pounds 40m.

Borrowings - incurred during an over-ambitious acquisition programme - peaked at pounds 120m with gearing above 100 per cent. Debts are now down to pounds 80m and BM still has saleable assets that could bring borrowings down a great deal further.

And, with a standstill agreement from bankers lasting until the end of next year, BM has time to get decent prices for remaining disposable assets - which include all distribution companies.

BM is not out of the wood yet, but the possibility of a viable future is emerging.

A conservative trading scenario might see BM earn 5 per cent operating margins on pounds 150m of sales. At these levels it could service pounds 25m of debt, pay a full tax charge and still make earnings of between 2p and 3p for the year to June 1995. That puts the shares, up 1p yesterday at 24p, on a p/e ratio in single figures.

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