Large and unsettled shareholders make for uneasy bedfellows

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The Independent Online
Companies with big, unsettled shareholders spend much of their time peering over their corporate shoulders; they can never be absolutely certain just what their restless investors will do with their shares.

Two groups in such a quandary are involved in this week's profit announcements. Their management know their results could influence the immediate direction of the companies.

Alpha Airports has Granada sitting somewhat reluctantly on 25 per of its shares; Nurdin & Peacock, the cash and carry chain, has a Dutch investment group, SHV, lurking with a 14 per cent interest. Unfortunately, neither Alpha nor Nurdin will have happy tales to tell. Both have already warned that profits will be down.

Indeed, Alpha, an in-flight caterer and airport retailer, has won few friends since it demerged from Forte two years ago. The shares, sold to investors at 140p, are now 116p.

It has been squeezed by the consolidation in the world aircraft services industry and two months ago was forced to warn that profits, expected tomorrow, would be a little below last year's pounds 21.4m.

Alpha's response to the changes sweeping through the industry has been to increase, when possible, its catering operations and move into ground handling services with the pounds 79m takeover of DynAir, a baggage handler and aircraft re-fueller in the United States.

To pay for DynAir it offered shares at 126p.

Alpha, like so many British groups, is having a hard time in the US.

It lost a British Airways contract at New York's John F Kennedy airport, worth around pounds 7.5m. As a result it expects to continue making catering losses in the US until it acquires other contracts or businesses.

The group arrived on the stock market because Forte, before the acrimonious battle with Granada, was keen to unload peripheral activities.

It held on to a 25 per cent stake that Granada inherited when it won the pounds 3.9bn takeover struggle - the last big clash the market saw despite recurring stories of high-powered bid action.

To make sense of the deal Granada has to sell chunks of Forte; indeed it has been suggested it should realise more than pounds 1bn before its September year-end.

There was a deafening silence, broken last week, when Regal Hotels moved from a modest player into a significant industry force when it agreed to buy 60 of Forte's White Hart chain of hotels for pounds 121.7m. The deal lifted the Regal portfolio from 23 to 83.

Granada is thought to be negotiating the sale of the Welcome Break motor way service centres - Whitbread is the favourite to do a deal - and there is talk it is near selling at least some of its trophy hotels.

Getting rid of the 25 per cent Alpha stake should be relatively easy, particularly if Granada can encourage a predator. The consolidation in the aircraft support industry has already created some powerful groupings and there is an extensive list of possible suitors such as Ogden, Gate Gourmet, Dobbs and the recently formed consortium bringing together Lufthansa, CaterAir and Sky Chef, the market leader. Assuming a bidder is prepared to pay a small premium Granada should be able to clip a further pounds 50m from its debt mountain by selling its Alpha shares.

N&P, the second-biggest cash and carry group in the country, faces a multitude of problems, most related to the steady decline in the strength of its traditional customers - independent retailers. An unsuccessful diversification into American-style warehouse club shopping has also taken its toll.

It has warned that profits, due on Thursday, will be in the pounds 19m to pounds 20m range. Analysts had nursed hopes of more than pounds 26m.

A year ago SHV, which owns 60 per cent of Makro, the UK's biggest cash and carry business, suggested it should inject 25 outlets into N&P in return for enough shares to give it control. The N&P board, supported by the Peacock family whose charitable trusts have 28 per cent, fended off the approach.

Under the City's takeover code SHV is now free to act again. Many suspect that if it is disappointed by Thursday's performance it will do so.

But even if spurred into action it may not make a full bid. An attempt to lift its stake to a controlling level is more likely.

By far the biggest group reporting this week - tomorrow - is Jefferson Smurfit. The Irish packaging and paper group could produce around Irpounds 420m (pounds 432m), up from Irpounds 317m. It has enjoyed strong pricing and high volume but faces a tougher time this year.

Moss Bros, the clothing retailer, also has a date with its shareholders tomorrow. A year's out-turn of pounds 9.5m is expected, up from pounds 7.9m, following a strong interim performance. In recent weeks Moss has been linked with Austin Reed, the clothing retailer which has been the subject of takeover speculation.

AMEC, which managed to see off a bid from Kvaerner, the Norwegian industrial group that went on to take control of struggling Trafalgar House, reports on Thursday. It should produce pounds 33m against pounds 24.2m last year.

Shares of Sentry Farming were among those caught up in the BSE disaster. But it was a false alarm; the group has little exposure to the disease. The shares, at 171p, are back near their year's high. Sentry owns and manages 45,000 acres. Figures are due tomorrow and profits could be around pounds 1m. Many shareholders, however, may be more interested in the yearly meeting - it is renowned for its sumptuous lunch.