Hongkong fear triggers plunge at Trafalgar

Trafalgar House was locked in urgent negotiations with its advisers last night as its shares plunged to an all-time low. Frantic trading saw 70 million change hands, more than 10 times normal volume, as the market speculated that Hongkong Land, Trafalgar's largest shareholder, was poised to write off its pounds 300m investment in the troubled engineering to construction conglomerate.

The company is expected to issue a statement today to reassure investors about its financial position and the support of Hongkong Land. It is understood that there will be a brief trading update although full details are not expected before the December announcement of results for the year to September - when extensive balance-sheet write-downs are anticipated.

The shares closed 2.5p lower at 21p last night, at which point they have lost three-quarters of their value this year. Some deals yesterday were struck as low as 18p as investors scrambled to get out. The company's 6 per cent convertible preference shares fell 4.25p to 43p, at which point they notionally yield more than 17 per cent, indicating the market's scepticism that the coupon will ever be paid.

The crisis at the group, whose struggling subsidiaries include the Cunard line, has intensified in the past 10 days since the cash-raising disposal of the Ritz hotel to the secretive Barclay brothers was announced.

Although Trafalgar raised pounds 75m from the sale, that is expected to only match the loss that the group will announce in December. Trading has remained poor across the range of Trafalgar's operations. Analysts said yesterday they had been frustrated in their attempts to speak to the company recently and remained in the dark about its financial strength.

PDFM, the fund manager, which is rumoured to have been a heavy buyer of the shares on the way down, refused to comment on its position last night. It is believed to have been involved in an agency cross of 28 million shares yesterday.

Hongkong Land's frustration with its 26 per cent stake in Trafalgar follows its injection of more than pounds 300m since 1992. The stake was to have formed an insurance policy for Land's parent, Jardine Matheson, ahead of the Chinese takeover of Hong Kong in 1997, but it has proved a disastrous investment.

Writing off the investment will cause a serious loss of face for the Keswick family that controls Jardine Matheson, and for Nigel Rich, the former Hongkong Land managing director, parachuted into Trafalgar in September 1994 to turn the company around.

Yesterday's fall was the latest blow in a dreadful year for Trafalgar which has included the QE2's ill-fated refit cruise, the failed Northern Electric bid and losses for the six months to March of pounds 48m.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific