Hartstone to sell two firms

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HARTSTONE, the heavily borrowed textiles company, is on the verge of selling two recently acquired European subsidiaries to relieve its debt burden, writes Robert Cole.

Courtaulds Textiles, the second largest UK textiles concern, may buy the French Cogitex and Spanish Aznar, both of which make ladies' tights and stockings.

Hartstone is carrying about pounds 90m of debts, run up during an ambitious acquisition programme that drew to a close with the purchase of Cogitex at the end of 1991 and Aznar at the start of 1993.

It paid pounds 60m for the two. However, it is unlikely to receive that price in a sale now. The European recession has weakened Hartstone's negotiating position, which has already been impaired by its well publicised financial difficulties.

Three profits warnings in 1993 sent the shares plummeting from a peak of 272p in February to a low of 33p just before publication of interim results in early December. Profits in the six months to 30 September dropped to pounds 428,000 from pounds 10.5m in the previous period.

Last July Hartstone reached a standstill agreement with its bankers. The agreement expires this Sunday - lending further urgency to Hartstone's need to raise money.

One insider to the discussions suggests that the banks will ease the pressure, however, and extend the standstill period. Hartstone shares closed at 58p on Friday.