Confusion over Stanhope credit

INVESTORS in Stanhope, the heavily indebted property developer, were yesterday left in confusion as an announcement of a refinancing was issued to the Stock Exchange by mistake and withdrawn 44 minutes later.

Under the terms of the deal that appeared on Stock Exchange screens at 16.27, three minutes before the official close, the group's revolving credit facility had been extended until 1996.

But although a final agreement with the banks is close, the announcement was released in error by Brunswick, the company's public relations adviser.

A second statement at 17.11 said the announcement was being removed. A third soon after said the banks involved in extending the revolving credit facility had indeed signed yesterday, but to become wholly unconditional it required the agreement of another group of project lending banks.

This was expected shortly, and then Stanhope's preliminary results would be released.

There was no effect on the share price of the USM-quoted stock, which rose 1p to 20p before the announcement. No bargains of significant size were agreed, and if small deals took place as a result of the first announcement the exchange would probably allow them to be unscrambled.

It is understood that a release had been prepared ready for the final agreement, but it was accidentally sent instead of another detailing only the sale of a property in Staines, west of London, to a foreign purchaser for pounds 20m.

It appears that the refinancing of Stanhope will be subject to the approval of its bankers in December 1994 and 1995. The facility has also been reduced from pounds 165m to pounds 160m. It is secured on some of the group's assets but other covenants on the loan were not disclosed.

Stanhope was forced into talks with its bankers when it realised that the continued fall in property values meant its accounts for the year to June 1992 would put it in breach of its banking covenants. The agreement will free it to publish results for the period, which had been delayed until the negotiations were concluded. These are likely to show a substantial drop in net asset value from the pounds 319m recorded last year.

The announcement came as Rosehaugh Stanhope Developments, the joint venture that owns the Broadgate complex in the City, agreed the sale of part of the development in a deal worth pounds 80m.

Credit Lyonnais is buying the 999-year lease on Broadwalk House, its offices at phases 9 and 10 Broadgate, for pounds 12.7m. It is also taking on pounds 67.3m of debt owed to RSD's bankers, which it will refinance from its own facilities.

However, RSD will share in any increase in the value of the building by 1995, up to pounds 1.75m.