Hotel deal paves way for Lonrho split

Dieter Bock made an important breakthrough yesterday in the rebuilding of Lonrho, the former Tiny Rowland fiefdom, buying back a one-third stake in the company's Metropole hotel chain from Muammar Gadaffi's Libyan government. Mr Bock said the $389m (pounds 250m) deal meant that a proposed three-way split of Lonrho later this year, hiving off hotels and African trading operations from the company's mining core, could go ahead.

Mr Bock said a traditional demerger of the three businesses, which would have handed shares to existing Lonrho shareholders, had been shelved because of tax complications in many of the countries in which Lonrho operated. Instead, the hotels and trading operations will be sold off, by the year- end, in public offerings of shares.

Analysts speculated that the deal in effect put Lonrho's mining interests up for sale. Mr Bock said yesterday he planned to sell his 18 per cent stake in Lonrho to Anglo American, the South African mining group, which has an option over the shares.

He will reinvest some of the proceeds in the African trading business and plans to head up the new company.

That would give Anglo, which earlier this year bought a 6 per cent stake in Lonrho from Mr Rowland, the former chairman, a near-25 per cent holding in the rump mining operation, whose biggest asset by far is a shareholding in the separately quoted Ashanti Goldfields.

It acquired the shares, and the option over Mr Bock's holding this year, after a proposed mining merger with Gencor was blocked by the European Commission.

Other senior executives from Lonrho will also transfer to the African trading business after the split, and the company will probably take the Lonrho name, in effect creating a "new Lonrho". The rump Lonrho will have no equity interest in the trading or hotels operations following the transactions.

Lonrho is paying the Libyans $389m for the Metropole stake, removing a poison-pill holding that was widely seen as preventing a planned flotation of the hotels operation.

The price was struck by adding a notional rate of interest to the $307m the Libyans paid for the shares in 1992.

Analysts think the hotels operation, which includes the British Metropole chain as well as the American-based Princess hotels, could be worth up to pounds 800m. The African trading operation has a price tag of about pounds 500m on it, although analysts admit that its collection of agriculture, motor import, property and manufacturing businesses are hard to value accurately.

Mr Bock said he plans to have a stake of between 20 and 25 per cent in the African operations, which might include some or all of Lonrho's African hotels and possibly the Hondo oil and gas business in the US.

He described the African trading company as a unique vehicle for institutions to gain an exposure to the growing economies of Africa. Emerging market funds are expected to be among the new company's largest shareholders.

The hotels operation is expected to benefit from a buoyant hotel market as occupancy and room rates continue to recover from the industry's deep recession in the early 1990s.

Recent hotel company flotations have all moved to early premiums.

News of the proposed changes at Lonrho accompanied interim figures, showing a 15 per cent rise in pre-tax profits from pounds 52m to pounds 60m. Earnings per share increased from 3.2p to 3.7p and a maintained dividend of 2.25p will be paid. Borrowings, which Mr Bock said he hoped the flotations would almost completely remove, were pounds 579m.

Lonrho's share price, which reached a low of 59p after the sale of the Metropole stake in 1992 closed 3p higher at 185p.

Comment, page 17

Suggested Topics
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam