Granada will take time over disposals
Thursday 11 April 1996
Granada, the media and leisure giant, is in no hurry to sell off pounds 2bn worth of assets earmarked for disposal, Charles Allen, the company's chief executive, said yesterday.
"There is no timetable, and the real objective is maximising returns to our shareholders," he said as Granada unveiled its first trading statement since winning its pounds 3.9bn hostile bid for Forte, the hotels and restaurants company.
He said the company intended to drive a hard bargain with potential purchasers, and would not do deals at low prices, despite having taken on debts of pounds 3.5bn to finance the takeover.
Granada has said it would sell Forte's Welcome Break motorway service operations, its Exclusive and Meridien hotels and stakes in the Savoy Group and Alpha Airports, in order to reduce debt. Analysts speculated that Whitbread, the food and drink company, would be the leading contender for the Welcome Break sites.
The stakes in Alpha and the Savoy would be sold by the end of the financial year, in September, Mr Allen hinted yesterday. He identified a "strategic buyer" for Alpha, probably another airports catering company, and said a "buyer acceptable to the management and the owners" would be found for the 68 per cent minority voting stake held in the Savoy.
The Wontner family, which controls the luxury hotels group, fought a long battle with Sir Rocco Forte, who had attempted a takeover. Mr Allen said relations between Granada and the Wontners were good. "There isn't the antagonism that there was between Forte and the Savoy," he said.
The Meridien and Exclusive chains would be auctioned once a list of "pre- qualifying buyers" was determined. Mr Allen said Sir Rocco, who has been seeking financing to win back some of his hotels empire, would be welcome to make an offer.
Mr Allen added that the company would easily reach its goal of enhancing profits from the Forte operations by pounds 100m in the first year, by cutting overheads and centralising purchasing. Granada has already shed 100 jobs at Forte, and expects to make further layoffs.
Granada has also pushed prices higher at its hotels and restaurants. But Mr Allen insisted consumers would be getting value. "If I have to pay pounds 15 for an afternoon tea, it had better be good. At some Forte hotels, some of it was not."
In the hotels division, the company has reorganised operations into three - London, UK provincial and overseas. Granada is planning to keep Forte's Travelodge and Posthouse chains.
The company reported no lasting effects from the BSE "mad cow" beef scare, although sales at Burger King outlets at its motorway service stations declined sharply in the few days following the crisis.
The end of the IRA ceasefire has had little or no effect on room occupancy, although Mr Allen said: "Personally, I was anxious about that." In television and rentals, results were at or above expectations. Granada's two ITV licence holders, Granada Television and London Weekend Television, saw their share of national advertising reach 23 per cent in the first three months of 1996, up nearly 7 per cent.
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