Control writes down 193m pounds

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The Independent Online
CONTROL Securities, the property, brewing and hotels group built up by Nazmu Virani, has disclosed what it called 'disastrous' write-downs of pounds 193m, mainly because of collapsing property prices.

However, the company's new management was hopeful that a restructuring deal could be agreed with its bankers in the next month or so. Sydney Robin, the chairman, also attacked the Serious Fraud Office for a high- profile raid on the offices a year ago, which led to the arrest of Mr Virani, the former chairman and chief executive.

He said the investigations were into the private affairs of the former chairman rather than into Control Securities. It was carried out 'in the most public manner' during investigations into the Bank of Credit and Commerce International and it led to the suspension of Control's shares.

'The search not only caused the company to lose credibility with many of the creditors and other parties with whom it customarily dealt, but also caused significant disruption to the attention that could be paid to the company's affairs,' he said.

Mr Virani and his two brothers, Zulfikar and Alnasir, are now in a legal fight with their former company over their dismissal as directors in April.

Mr Robin came in temporarily as executive chairman. A shortlist has been drawn up for the chief executive's post in anticipation of a successful financial restructuring. This could happen once banks, led by Barclays, have agreed a new business plan recently put to them, possibly involving a debt-for-equity swap.

The banks have agreed a standstill to the end of November, while bondholders have agreed to hold their hand until 18 January.

The write-downs led to a pounds 192m net loss for the year to March, compared with a loss of pounds 4m the year before.

The biggest write-downs were in the value of investment properties, which fell pounds 152m to pounds 210m. The hotels, breweries and other properties fell pounds 70m in value to pounds 90m, and pounds 26m has been written off other assets.

The result is that net assets have been slashed from pounds 294m to pounds 38m, or about 10p a share, compared with the 16.5p suspension price. There is no dividend, but Mr Robin hopes to get the shares requoted eventually.

Operating profits fell from pounds 37m to pounds 26m, pounds 1m less than interest charges. The Belhaven Brewery subsidiary raised profits from pounds 2.85m to pounds 3.35m.

John Kerslake, finance director, said the board was taking a more cautious view of property values than many other companies. He also said the new plan was based on rationalising in order to build on core businesses.