Gaddafi 'no' to Rowland buyout loan

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TINY ROWLAND has made a series of visits to Libya in recent months in what is believed to have been a doomed attempt to secure finance to buy out Dieter Bock's 18.8 per cent stake in Lonrho.

According to Arab sources, Mr Rowland proposed that Libya should either lend him the money to buy out Mr Bock or buy the share stake on its own behalf. So far, Colonel Muammar Gaddafi, the Libyan leader, appears to have said no.

Mr Bock bought a 9 per cent stake from Mr Rowland for pounds 55m early this year and added another9.8 per cent by underwriting a rights issue. Mr Rowland is now only the second-largest shareholder, with 9 per cent. Although the two men are joint chief executives, Mr Rowland still dominates the company and is opposed to any significant change in the way Lonrho is run.

Mr Rowland's attempts to remove Mr Bock reflect growing frustration with his business associate's desire for more accountability - typified by his wish to appoint non-executive directors - and a better relationship with large City shareholders.

Mr Rowland's relationship with Colonel Gaddafi goes back about 25 years. In March last year the investment arm of the Libyan government - the Libyan Foreign Investment Company - paid pounds 177.5m for one- third of the share capital of Lonrho's Metropole Hotels.

The deal, part of a programme of asset disposals to reduce Lonrho's high level of debt, caused a furore in the City and seriously hit the company's share price. The Gaddafi money proved insufficient, and Lonrho was forced to seek further assistance from Mr Bock.

Last week the Independent revealed that Mr Rowland had intervened in the caseof the two Libyans alleged to have been responsible for the Lockerbie disaster in December 1988, when 270 people aboard Pan Am flight 103were killed in a mid-air explosion. Despite growing pressure on Libya, the two men have not been extradited to stand trial. Mr Rowland helped to secure a Scottish lawyer, Alistair Duff, to represent them.

When Colonel Gaddafi declined to help in buying out Mr Bock's shares in Lonrho, Mr Rowland appears to have looked elsewhere for financial help, including Credit Suisse, the Swiss bank.

Any closer Libyan involvement in Lonrho would almost certainly adversely affect Lonrho's relationship with its biggest American shareholder, the Fidelity fund management group, which has a stake or around 8 per cent.

Because of the strained relations between the US and Libya over Lockerbie, Fidelity might feel obliged to sell its Lonrho stake, causing another bout of turbulence for the share price.

Mr Rowland once said: 'Gaddafi is a super friend. This is not the only deal we will do with him. We are already doing a joint venture with him for 17 countries in every type of business. At my age I can say anything I like.'