Lonrho cuts debt further by selling pounds 110m Krupp stake: Spicer scoffs at the idea of buying House of Fraser rump

LONRHO has slashed its debt by a further pounds 110m with the sale of a 50 per cent stake in an associate trading group, Krupp Lonrho.

Lonrho claimed yesterday that its debt, which at one time stood at more than pounds 1bn, was reduced to pounds 477m as a result of its disposal, the latest in a series of sales it began last year.

The deal was apparently carried out by the enigmatic businessman Dieter Bock, who became joint chief executive of Lonrho with Roland 'Tiny' Rowland earlier this year.

As a result of the deal Krupp Lonrho, an international trading company, will be fully owned by Friedrich Krupp AG Hoesch-Krupp by the end of next month.

Lonrho will receive a cash payment of DM282.5m ( pounds 110m). The investment in Krupp was made by Lonrho for DM200m in 1988.

Mr Bock said yesterday Lonrho's gearing 'has been reduced to 27 per cent, a very respectable figure for a public company. Lonrho is now in a position to look for growth'.

Lonrho said it had decided to sell when Krupp forged a link with the Hoesch group. Krupp intended to fuse this business relationship with its trading links with Lonrho. If Lonrho had wished to retain its 50 per cent shareholding with Krupp it would have had to inject more money into the operation.

Lonrho executives appeared to be unmoved by the decision of the Fayed family of Egypt to float off 59 department stores in the House of Fraser stores group, while retaining Harrods. Lonrho has been stalking the Fraser group since the mid-1970s but yesterday Paul Spicer, Lonrho's deputy chairman, said, when asked whether Lonrho would be prepared to buy the rump of the Fraser stores empire: 'What? With the debt they have, you must be joking.'

Mr Spicer argued that since Lonrho had so many legal actions outstanding against the Fayeds and their business interests 'any flotation is made more difficult'.

Lonrho was thwarted in its second attempt to acquire the Fraser stores group when the Fayeds agreed a takeover with Fraser management before Lonrho had gained full approval from the British authorities.

Mr Bock, who holds a 22 per cent stake in Lonrho, said yesterday that he hoped to introduce three non-executive directors to the Lonrho board at the end of this year in an effort to strengthen management controls and reassure institutional investors.