Isosceles directors plan third shake-up

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The Independent Online
DIRECTORS of Isosceles, the Gateway supermarkets group, yesterday decided in principle to restructure the group for the third time, privately acknowledging that it cannot recover without a massive cut in its pounds 1.1bn of borrowings.

The group confirmed that Alistair Mitchell-Innes, the chief executive, would be leaving the company next year, worsening what demoralised insiders at Gateway's headquarters in Bristol already describe as a leadership crisis.

Banks including Midland, Bank of Scotland, Chemical Bank and Industrial Bank of Japan are expected to be asked to swap their debt for equity. However, the sum swapped may be pounds 700m- pounds 800m, rather than the pounds 500m originally envisaged, as Gateway's fortunes continue to decline.

Ernest Sharp, the chairman, said yesterday the group would consider the appropriate financial structure once it had received a review from its management consultants.

Coopers & Lybrand are believed to be conducting the review. It is expected to recommend a radical overhaul of the original plan to convert Gateway supermarkets into any of five different facias.

The 'David Greig' and 'Gateway Village' formats are expected to be scrapped.

Current trading is understood to be poor. Like-for-like sales have been running at 10 per cent below the levels of last year, although the decline has been reduced to 7-8 per cent in the past three weeks.

Monthly operating profits have slumped, making it increasingly difficult to meet the hefty interest bill. No loan covenants have been breached.

Mr Mitchell-Innes, who took over from David Smith as chief executive in September 1991, will continue to have primary responsibility for Gateway until a new chief executive is found. He said at his appointment that he would leave in 1993.

His successor is unlikely to be found before the restructuring, which would put the group on a more solid footing.

Samuel Montagu recently took over from SG Warburg as adviser to the banks.

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