Brent Walker puts off sale

City indifference delays disposal of pub chain

Betting to pubs group Brent Walker has been forced to delay the planned flotation or sale of its Pubmaster business until spring 1997 at the earliest.

The company had previously indicated a sale might have been on the cards for this summer, and the decision reflects diminishing enthusiasm in the City over the growth potential of the business.

However, investors will be reassured that Brighton Marina and Cardiff Arena will be sold for pounds 15m within "the next two to three months", according to chief executive, John Leach.

He said the two property businesses were insignificant in the context of BW's pounds 1.4bn of debt, although a deal will conclude the long search for buyers that began in 1992 following the fall from grace of Brent Walker's founder, George Walker, and the company he built up through the 1980s.

But regarding progress on the 1,500-plus Pubmaster chain, Mr Leach said: "We have to decide on the best exit route for our stakeholders - banks and shareholders." Lazards, the merchant bank, has been appointed to handle the sale.

The sale of Brighton Marina and Cardiff Arena will leave Brent Walker with only a small stores development site in Hackney, which is awaiting the outcome of a planning inquiry, outside its two main assets - betting chain William Hill and the Pubmaster business.

Last week, the company wrote down the value of its Pubmaster estate by pounds 17.9m to pounds 140m. Operating profits, however, rose to pounds 16.3m from pounds 13.3m, on turnover slightly ahead at pounds 92.9m.

Analysts see Pubmaster as a predominantly tenanted chain at the lower end of the investment spectrum. Several pub businesses have obtained stock market quotations recently, but there is a distinct split between the prospects of managed pub estates and tenanted pubs. The former, epitomised by the likes of Tom Cobleigh and Wetherspoon, generally have ratings to match investors' high hopes. Tenanted pub businesses, by contrast, have lower ratings, reflect- ing the predominantly cash-driven nature of the business. The company owns the freehold, but leases its pubs to self-employed managers. Other than rent, profit comes on the margin from supplying the pubs with beer, bought at a substantial discount from the brewer. Last year, Pubmaster had 94 managed pubs and 1,659 tenanted pubs.

Analyst Charles Winston, of stockbroker BZW, said: "Pubmaster is in a cleft stick. It needs a high price for the business to use the proceeds to maximum effect but can't raise the money because of the low multiple tenanted businesses sell at." He added that a burden of proof remained on Pubmaster's management.

Last week's figures also revealed a huge write-down of the value of the William Hill betting chain, by pounds 267.9m to pounds 427.9m. Some analysts speculated it heralded the imminent sale of the business, for up to pounds 450m, with Bass and Ladbroke in the frame as likely buyers. But any such move would entail a huge dilution for shareholders, as remaining assets would be insufficient to service bank debt.

The write-down reflected the impact of the National Lottery, and William Hill's ongoing legal battles with Grand Metropolitan, which sold the chain for pounds 685m in 1989.

Mr Leach said matters were improving slowly at the business. In the last three months it has introduced spread betting on big sports events, where punters bet on the margin of a victory.

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