Mirror Group may buy its building: To move or to stay? Site's future in balance as newspapers try to decide on the most economic course

Click to follow
The Independent Online
MIRROR Group Newspapers is considering buying its Mirror Building headquarters in London's Holborn Circus from the receiver of Robert Maxwell Estates for an amount thought to be up to pounds 20m.

MGN has yet to make a final decision, and insists it may still move to Docklands or the West End to save money. But it believes it is in a strong position to get a bargain if it buys from the receivers because the Mirror Building is obselete and virtually worthless if MGN moves out.

The site includes the original printing press galleries and would have to be completely redeveloped to attract any new tenants. But redevelopment at present property values is hopelessly uneconomic.

The company has already looked closely at several sites in Docklands, including Canary Wharf, and at the new Ark building in Hammersmith, West London. However, speculation intensified in property circles last week that MGN will opt buy its own building from Maurice Withall of the accountants Grant Thornton, receiver of Robert Maxwell Estates, a small property subsidiary of the late tycoon's private business empire.

Mr Withall said: 'I have been talking to MGN over the past month and particularily the last week over the possible acquistion of the building by them. Whether they will buy it depends on their deliberations about moving elsewhere. They know what I want and now its up to them.'

MGN is keen to cut costs. More than 54 per cent of the group's shares are controlled by John Talbot, the administrator to the late Robert Maxwell's private businesses. The vast majority of the shares under Mr Talbot's control were pledged by Robert Maxwell as collateral to banks for loans to private Maxwell companies. Mr Talbot wants to see MGN's performance improve as far as possible, including cutting costs, before he sells his stake on behalf of creditors.

MGN is currently paying just over pounds 6m a year in rent for the Holborn building, at least pounds 30 per square foot, whereas if it moved to Docklands, for instance, it would probably pay no rent for the first two to three years followed by a rent of about pounds 10 per square foot.

Robert Maxwell Estates, has owned the lease on the Holborn building since just before the Mirror was floated. The lease expires in 1998, and on that basis independent property agents estimate Mr Withall may get as much as pounds 20m for it.

The talks are complicated by the fact that MGN has refused to pay Mr Withall rent for the Holborn building for the last two quarters, so that by the end of June it will owe pounds 4.5m in back rent. Mr Withall said he would pursue his rights under section 6 of the Law Distress Amendment Act, and expected to the matter to return to court within the month. A spokesman for MGN said: 'The dispute goes on and could come to a head quite soon.'

(Photograph omitted)