Bottom Line: Pentos woe

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The Independent Online
THE NEXT year or so will show whether Pentos really is worth rescuing. Interestingly, four of its six banks plan to use the company's much-flagged pounds 45m rescue rights issue to rake in their chips and head for the cashier.

Foolish over-expansion of retailing space, bringing with it the false comfort of reverse premiums, and misguided acquisitions such as Wilding Office Equipment have left Pentos on its knees with a wrecked balance sheet.

Dillons, Ryman the Stationer and Pentos Office Furniture are making no money while Athena lost pounds 8.6m in 1993. Ironically, it looks as if Dillons, long a campaigner for the ending of the net book agreement, will suffer when it duly ends next year.

Despite the rights Pentos will be left with hefty borrowings - the banks have agreed to core lending of pounds 40m with an additional pounds 26.7m seasonal headroom.

Apart from interest costs, pressure on margins in all Pentos' businesses will be severe while accounting policies will be tougher. Sales so far this year have been below budget and worthwhile profits and a return to dividends are some way off. At 29p the shares are pure speculation.

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