First National told to probe rights leak

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THE Stock Exchange has asked First National Finance Corporation, the troubled lender, to find out how news of its rights issue leaked to last Sunday's newspapers and raised the danger of a false market in the company's shares.

Prompted by the exchange, FNFC yesterday confirmed that it is planning to raise pounds 47m through an issue of convertible preference shares. The announcement had been trailed widely by, among others, the Independent on Sunday.

FNFC said the loss that it will announce tomorrow would be in line with market expectations, which suggests around pounds 30m. Most of this was incurred in the six months to last April when it ran up a pre-tax deficit of pounds 22.6m.

The company said a write-down in the value of its premises, write- offs in the discontinued property division and a disposal would produce an extraordinary loss of about half the pounds 16.9m it suffered in the first half. FNFC will not pay a dividend.

Tom Wrigley, FNFC's chief executive, could not be contacted to add to the statement.

FNFC was one of the victims of the secondary banking crisis in the 1970s, and had to be rescued by the Bank of England's 'lifeboat'. It began paying dividends again in 1986 and went on to make profits of pounds 71.6m in 1989.

However, the property recession has forced the company, which lends on second mortgages and home improvements, into loss once again.

The shares were unchanged at 52p, having been as low as 13p last year.