Brent Walker figures bring fears of new difficulties

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BRENT WALKER, which completed its pounds 1.3bn debt refinancing only six months ago, is facing a perilous winter after reporting half-year figures worse than had been anticipated.

The group has yet to find a permanent replacement for Lord Kindersley, who resigned as chairman earlier this year.

If trading conditions do not improve, some bankers close to the group fear that the betting shops and pubs group may need further assistance from banks that have already written off nearly pounds 1bn of loans to the company.

Brent Walker recorded a pounds 79.4m loss in the six months to 30 June, which was actually an improvement on the equivalent figures last year, which included large asset writedowns.

Operating profits fell 14 per cent to pounds 29.5m. Despite an agreement which meant that pounds 43.6m on interest payments were converted into equity and pounds 27m deferred indefintely, the group suffered a net cash outflow of nearly pounds 8m.

Ken Scobie, chief executive and acting chairman, said the refinancing had been structured so that the group would produce cash soon. However, when the budgets were drawn up it had been expected the economy would recover in the spring of this year.

Banking sources said it would be difficult to bring in a new chairman until it was clear that the group was on an even keel. Mr Scobie agreed. 'It is hardly the plum job to take on at the moment,' he said.

The recession has hit the group's betting operation, William Hill, despite increased market share. Profits slipped 18.5 per cent to pounds 26.8m.

Mr Scobie said the average bet was down, particularly in credit betting which attracts large-scale gamblers. It was expected that the second half would also be poor.

The group's Pubmaster operation, which runs pubs which brewers dispose of because of the Monopolies Commission report on the brewing trade, is thriving.

Its deal to lease 743 pubs from Allied-Lyons has been a success despite the Office of Fair Trading forcing changes, and Pubmaster has a joint venture with Labatt, the Canadian brewer, to fund further pub purchases.

The group's long-standing legal dispute with Grand Metropolitan over the purchase of William Hill goes to arbitration next week.

Brent Walker is claiming pounds 250m from Grand Met and in return Grand Met is claiming pounds 62m from Brent Walker. No decision is expected until next spring.