The directors say the company has sufficient working capital for 'present requirements' after taking account of the pounds 80m minimum proceeds from the rights issue announced on Wednesday, the pounds 124m sale of VAG, the Volkswagen distributor, and further disposals.
The rights issue is being half- underwritten by Dieter Bock, the German businessman who is also buying half the 15 per cent stake owned by Roland 'Tiny' Rowland, Lonrho's chief executive.
The working capital statement, included in documentation sent to shareholders yesterday, says: 'The board expects to be able to raise approximately pounds 300m to pounds 400m as a result of further disposals in 1993.'
Of Lonrho's pounds 1.24bn of borrowings on 30 October, pounds 546m is repayable within five years. This includes pounds 454m that is unsecured.
The statement said that part of the proceeds of the further disposal programme could be used to help repay these loans 'if alternative funding arrangements have not been implemented'.
Working capital statements are designed to give shareholders comfort that companies have sufficient funds for a period. The period is usually taken to be about a year.
The documents also reveal that Lonrho is the subject of a suit in connection with its sale for pounds 177.5m of a one-third stake in Metropole Hotels to the investment company of the Libyan government. The action was brought earlier this year by Mohammed Ali Elobeidi, a middle-man in the deal.
The action is against Lonrho, Mr Rowland and others. It seeks pounds 8.88m for breach of contract concerning commission and brokerage fees alleged due and agreed to be paid by Lonrho and Mr Rowland for the Metropole Hotels deal.
The document also says Lonrho itself has brought action against the Fayed brothers, who thwarted Mr Rowland in his attempt to acquire Harrods and House of Fraser.
This action is also against the Fayed brothers' financial advisers, the merchant bank Kleinwort Benson, a former Kleinwort Benson executive, John MacArthur, and Lord Tebbit who, as Secretary of State for Trade and Industry, gave the go-ahead for the Fayeds to take over House of Fraser.Reuse content