Business Information Service: Last week

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The Independent Online
THE WEEK began with former state- owned industry British Steel sending jitters through the London stock market on Monday after it announced a pounds 55m pre-tax loss and cut the dividend. The market's response to the news was to knock 10 per cent off the value of the company's share price.

In a memorandum to investors holding pounds 450m of bonds, Heron International, the debt-laden property and petrol station company, warned that it will have to make further provisions against its assets which could leave it with net liabilities.

On Tuesday a near 22 per cent debt reduction at Lonrho, Tiny Rowland's international trading group, failed to offset the effects of recession and problems at its South African platinum mines, where profits collapsed as precious metal prices declined. It turned in a 65 per cent drop in first-half pre- tax profits to pounds 38m and slashed its dividend payment from 5p to 2p per share.

BP said it would quicken the pace of the debt reduction programme that it had in place before the surprise ousting of Robert Horton, the former chairman and chief executive.

A committee of inquiry set up under Sir David Walker to look into suggestions of fraud and malpractice in the Lloyd's of London insurance market earlier this year cleared the institution but criticised the standards of some market professionals.

It emerged on Wednesday that members of the public had subscribed for only 23 per cent of the shares offered by The Telegraph, Conrad Black's UK newspaper group, to raise pounds 84.5m. Stockbroking analysts immediately forecast that the new shares would fall below the 325p offer price when dealing begins on Wednesday.

Meanwhile, the cost to the taxpayer of privatising British Rail was expected to be at least pounds 200m following pre-tax losses of pounds 144.7m for the 1991-92 year. BR chairman Bob Reid warned the Government that privatisation was unlikely to succeed unless spending was increased.

It was revealed that Lloyd's members would be asked to pay a further pounds 307m - taking the total demand to pounds 550m - from their private funds to meet losses from seven insurance syndicates once managed by Gooda Walker, the underwriting agency whose losses alone account for nearly a quarter of the total pounds 2bn loss at Lloyd's.

Industrial giant the General Electric Company showed its resilience to the economic climate when it announced higher pre-tax profits of pounds 829m for the year to 31 March and raised the dividend from 9.25p to 9.6p. The result was set against a background of 14,500 job losses in the company.

Thursday saw corrective measures from the US to bolster its flagging economy with a half point cut in the US Federal Reserve discount rate to 3 per cent, its lowest in 29 years. This follows an unexpectedly sharp rise in the US unemployment rate to its highest level since 1984. The reduction in the discount rate also sparked the lowering of commercial bank prime lending rates from 6.5 per cent to 6 per cent.

MFI, the furniture maker and retailer, was able to find buyers and sub- underwriters for all its shares only by reducing its flotation price to 25 per cent lower than it had originally hoped.

Having sustained heavy losses throughout most of the week, share prices in London rose on Friday on rumours that the Bank of England was likely to deliver another base rate cut later this week about the time of the world economic summit.

Forte called off the proposed sale of its Gardner Merchant contract catering subsidiary to potential buyers, Compass Group of the UK and ARA services of the US, after they refused to pay the asking price of more than pounds 550m.