Forte to float airport service arm for pounds 165m: Hotels group takes next step in cutting debt and focusing on core

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The Independent Online
FORTE, the international hotels group, is to float its airport services division early next year, raising about pounds 165m as part of its plan to cut debts of pounds 1.3bn.

The company failed to find a trade buyer for the operation, which employs 6,000 people providing flight catering and airport retailing services.

Forte shares rose yesterday 5p to 232.5p.

Rocco Forte, chairman, said: 'It is a further step in the implementation of our strategy to focus management and financial resources on the development of our core hotel and restaurant business.' The sale would be subject to market conditions, he added.

The company is hoping to raise up to pounds 500m from disposals over the next two to three years. Gardner Merchant, its contract catering business, was sold last December to a management buyout. The Harvester restaurant chain, which Whitbread considered buying, is still on the market. And about 30 hotels in Britain and 20 US outlets, part of the Travelodge chain, are for sale.

In the year ended last January airport services reported trading profits of pounds 17m on turnover of pounds 404m. In the six months to July turnover was pounds 208m with pounds 12m of trading profits.

Forte will retain 25 per cent of the division after the listing. Andrew Hunter, analyst at Hoare Govett, estimated that Forte could raise about pounds 165m from selling 75 per cent of the division.

The division's two biggest clients, BAA and British Airways, had been consulted and were said to be 'very comfortable' with the plans. A spokesman said the advantage of a flotation was that 'our customers would see a seamless join during the changes'. He said Forte would continue to work with the new company in such areas as purchasing.

A prospectus for the division, to be published in January, will contain a profit forecast and detail how much debt will be carried within the operation. Analysts said airport services would make about pounds 22m next year.

Forte said the sale should bring gearing down from about 47 per cent to 40 per cent. The company is rumoured to be planning a rights issue to fund expansion in Europe. Yesterday the company said it would tap shareholders for cash only to fund a sizeable acquisition. 'No such acquisition is on the horizon,' a spokesman said.

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