The announcement sent the group's shares down 7p to 14p, wiping a third off its market value. That left the group worth just pounds 12.3m compared with a peak of pounds 511m in 1989, when its shares reached 582p.
The 2.9p dividend, which would have cost pounds 2.5m, was announced in July, when the group revealed a pounds 7.6m loss before tax. Analysts had criticised the group's decision to maintain its payout considering the losses, but the group had hoped to fund it by selling assets.
Geoffrey Wilson, chairman, said yesterday: 'At that time, we were seeing a pace of realisations which has now slowed up.' He cited two deals, which were both well advanced when the dividend was announced, that had since fallen through.
But he denied that there was any pressure from the group's bankers to cancel the payment.
Gearing, on bankers' definitions, stood at 152 per cent at the year-end compared with a maximum permitted of 166 per cent. It is due to repay pounds 15.4m of borrowings next week. Mr Wilson said this would be repaid as planned from the group's cash resources. He added that Greycoat would have been able to fund both the dividend and the debt repayment from cash resources.
The preference dividend is cumulative, so the arrears will have to be repaid before payments on the ordinary shares can be resumed.
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