City & Business: International rescue

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The Independent Online
IT'S NOT often I get tempted into writing a eulogy, but the manner and method with which Hongkong Land and Swiss Bank Corporation have rescued Trafalgar House from insolvency - putting quite a number of top-drawer City noses out of joint in the process - surely deserves some applause. Here was a once-mighty company - Trafalgar includes the Ritz hotel and the QEII - that was technically bust thanks to recession and what Simon Keswick, its chairman, last week referred to as the 'eccentric' accounting practices of the previous management.

As corporate disaster stories go, Trafalgar House is big league. Over the past three years, some pounds 1.3bn of shareholders' funds has disappeared up the Swanee, and nearly pounds 1bn has been raised through rights issues to bail the company out. Given the record, you wouldn't have thought the last of these - a pounds 425m issue of convertible preference shares launched last week - would have been possible at all, and indeed Trafalgar's traditional City advisers seemed to think it wasn't.

Then along came Swiss Bank last September and promised to underwrite the whole thing. That enabled Hongkong Land, Trafalgar's largest shareholder, to go to HSBC and secure a new facility of pounds 300m. Its assurance that Jardine Matheson, Hongkong Land's parent, stood fully behind Trafalgar helped win the agreement of other bankers to waive banking covenants.

But it isn't just that Swiss Bank was able to do what others shied away from; it has also set about it in a thoroughly unorthodox way, driving a coach and horses through the methods and conventions of the traditional underwriting cartel. I won't bore you with the details, suffice it to say that they've severely irritated City traditionalists. To established houses, the people from Swiss Bank are savages with bones through their noses bludgeoning their way into the market (it's not just on the Trafalgar deal that they've gone against the grain). But whatever the traditionalists say, Swiss Bank has succeeded where others didn't even dare to try. We'll be hearing a lot more of them in the years ahead.

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