Cathcart drives off with pounds 2m from Avis

Magnus Grimond

Alun Cathcart, the chairman and chief executive of Avis Europe, is set to receive his second pounds 2m windfall in the space of a decade from the flotation of Europe's largest car hire operator.

Yesterday the group announced the 108p to 126p a share price range for the group's stock market offering, its second in just over 10 years, which will value Avis at up to pounds 734m, making it the biggest public offer this year.

Mr Cathcart made pounds 2.2m before tax from the group's original stock market debut in 1986 and subsequent highly geared pounds 900m sale in 1989 to a group that included D'Ieteren, Belgium's leading car importer, and General Motors.

The latest float will see him convert options into shares worth pounds 2.37m at the 117p mid-range price. He is selling 60 per cent of his stake, which would raise pounds 1.42m at the mid-price, mostly to cover tax liabilities, and is locked into the remaining holding for 12 months. In all, 62 managers will end up with a stake worth between pounds 6.3m and pounds 7.3m as a result of the conversion of options granted at the equivalent of 1p each.

Mr Cathcart promised yesterday he would not be coming back to the market a third time. "I can guarantee, after the last four weeks, I have done my last Avis flotation. That I can guarantee," he said yesterday.

Ten per cent of the offer, which will raise a net pounds 237m at the mid-price, will be reserved for individual investors, who will be entitled to membership of the Avis Europe Founders' Club. This will make them eligible for perks such as free extra days on Avis rentals, a hot line to automatic reservations and discounts on hire rates.

Individuals will have to apply for their shares through intermediaries such as banks, stockbrokers and four share shops. But Mr Cathcart said UK retail demand was running at "very high levels". The retail offer closes on 21 March, with trading due to begin on 4 April.

Avis is estimating that operating profits rose a fifth to pounds 101m in the 12 months to the end of last month. Merrill Lynch, one of the brokers to the issue, is forecasting that profits will rise from pounds 56.8m to pounds 89.7m at the pre-tax level in the year to next February, putting a p/e ratio of between 12 and 13.5 on the indicative pricing range.

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