Lonrho cuts borrowings with 13m pounds flats sale

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The Independent Online
LONRHO, the debt-ridden international trading conglomerate, made another attempt yesterday to reduce borrowings with the announcement that it had sold 4,300 flats in Baden- Wuerttemberg for DM30m ( pounds 12.8m). Mortgage liabilities of DM353m are to be assumed by the purchaser, who has not been named in the deal.

Announcing the deal barely 48 hours before the group's annual general meeting tomorrow, Lonrho said that the book value was DM327m and profits before tax in 1992 were DM3m.

The rationalisation move was foreshadowed in Lonrho's rights issue document last December when the group set out to raise pounds 181m and give a substantial shareholding to the little- known German businessman, Dieter Bock. Mr Bock was subsequently appointed joint chief executive of Lonrho with Roland 'Tiny' Rowland, the moving spirit behind Lonrho. Shareholders are to be asked tomorrow to confirm Mr Bock's appointment as a director of Lonrho.

In its rights issue document Lonrho said that its borrowings had been reduced to pounds 850m net at 30 September 1992. Mr Bock said last year the group would sell the German flats.

The move to reduce borrowings at this time echoes an asset disposal last year at the time of the annual meeting. Then Lonrho disposed of a substantial stake in the Metropole hotel group to the Libyan investment body.

Analysts are now expecting that the next significant asset disposal by Lonrho could be the Observer newspaper, which is reckoned to be losing pounds 1.5m a month. The title may command a pounds 30m purchase price.

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