LIT seeks reorganisation following sale of US arm: Financial group is left with Johnson Fry and pounds 12m debt

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LIT Holdings, the financial services group that owns Johnson Fry, is about to propose a pounds 40m reorganisation to its shareholders and bankers following the sale of its US and futures-related business.

The sale of LIT America, which made up 80 per cent of LIT's business, to Spear Leeds and Kellog for roughly pounds 15m earlier this year has left LIT with a rump of debt and preference shares to sort out.

LIT, headed by Christopher Castelman, went on an acquisition spree in the 1980s which resulted in the group running up big losses on its US futures-clearing operations. It also became involved with Roger Levitt's Levitt Group. LIT managed to sell its stake for pounds 16m in 1990 before the Levitt Group went bust.

LIT reported a pre-tax loss of pounds 1.21m in 1992 following a profit of pounds 1.29m in 1991.

Now LIT consists solely of the UK financial adviser Johnson Fry. It is left with debts of pounds 12m and three ranks of preference shares totalling another pounds 42m. Paul Gildersleeves, company secretary, said that taking the US sale proceeds of pounds 15m into account and pounds 5m of dividend arrears LIT is left with roughly pounds 40m to renegotiate with its banks and 7,000 shareholders.

Some of the debt will be paid off, while the prefs will be converted to ordinary shares, thus diluting existing ordinary holders, which include Johnson Fry managing director Charles Fry, who holds about 7 per cent.

Much of the preference stock is already held by LIT's banks following an earlier reconstruction in 1990, which the company was forced to undergo following losses in the US.

Mr Gildersleeves said that the reconstruction proposals would be sent to shareholders soon. They would be able to vote on the plans at a series of extraordinary general meetings.

'LIT needs a breathing space to find new products,' Mr Gildersleeves said. Johnson Fry was the leading provider of Business Expansion Schemes until they were abolished. It was now one of the UK's leading independent managers of residential property, he said, with about pounds 650m under management. It was also moving into equity fund management. LIT shares were unchanged yesterday at 3.5p.