City hopes dashed as Rosehaugh fails

ROSEHAUGH, one of the biggest and best-performing property companies of the 1980s, yesterday became the latest victim of the 1990s slump as it asked its banks to appoint an administrative receiver.

The request marks the final collapse of the company built up by Godfrey Bradman, which was worth more than pounds 800m at its peak. Yesterday Rosehaugh shares were suspended at 7.25p.

Although he left the company at the beginning of the year, he established its reputation as a pioneer in the development of trophy buildings, such as the acclaimed Broadgate complex by London's Liverpool Street station.

The collapse shocked the City as it came just days after the successful agreement of a refinancing of the pounds 1.25bn debt in Rosehaugh Stanhope Developments (RSD), the joint-venture company behind Broadgate, which was expected to secure the future of Rosehaugh and Stanhope Properties.

The receivership is not expected to affect RSD, and Stanhope said yesterday it hoped to reach agreement on a restructuring of its pounds 250m debts by the end of the year.

Rosehaugh's failure is also another blow to Barclays, which has already been badly hit by the collapse of property companies such as Olympia & York and Mountleigh, and has a large exposure to other troubled companies. Its exposure to Rosehaugh is believed to be about pounds 50m and it was co- ordinating discussions between the company and its 26 bankers.

Barclays said yesterday that it always tried to support its customers and 'where possible, would far rather work with companies and the incumbent management who know the company and its assets best'.

Peat Marwick is expected to be confirmed as receiver today.

Rosehaugh's bank debts, excluding the loans to RSD, are about pounds 350m. Net assets at the last balance sheet date in June 1991 were pounds 164m, down from pounds 474.9m the year before. This is likely to have fallen sharply again following a revaluation for its 1992 accounts.

The City expressed its concern that Stanhope could be hit by the collapse by marking its shares down 6.5p to 11p. However, banking sources said that the lenders believed Stanhope should be able to repay its debt in full. By contrast, Rosehaugh's borrowings exceeded its assets and it would have needed an injection of working capital to keep it going.

Stuart Lipton, chief executive of Stanhope, said: 'There is no reason for Stanhope's position to change because of the receivership.' Although Broadgate is almost fully let and can cover its financing costs, RSD has been weakened by Ludgate, another huge City development, which is still searching for tenants.

UBS Phillips & Drew, the securities house that is owed about pounds 200m by RSD, is believed to be close to agreeing the purchase of its building in Broadgate as a way of securing payment of its debt.

Rosehaugh also owns Pelham Homes, a residential property developer, and a stake in a joint venture - again with Stanhope - to redevelop the King's Cross area in London. Yesterday's events make the development of the capital's biggest derelict space even more unlikely.

Godfrey Bradman and Stuart Lipton forged a formidable partnership during the last property boom.

Mr Bradman was the financier with a social conscience, a whiz at developing novel methods of funding ambitious projects. His crusading zeal ranged from Aids to lead-free petrol, and he used his wealth to fund causes as varied as anti-abortion organisations and the freedom of information movement.

Mr Lipton was the builder with architectural sensibilities, capable of giving clients the sort of developments they would want.

When Mr Bradman's Rosehaugh linked up with Greycoat, run by Mr Lipton and Geoffrey Wilson, they embarked on the redevelopment of Finsbury Avenue on the fringes of the City, which later became the acclaimed Broadgate scheme.

In the post-Big Bang City, marked by financial services groups awash with money and hungry for high-quality office space, it was for a time an irresistible combination. But as the market collapsed, their working relationship cooled and each increasingly went his own way.

Hamish McRae, page 21

(Photograph and graphs omitted)

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