Mowlem seeks wealthy co-pilot for Docklands project

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JOHN MOWLEM, the construction group, is hoping to cash in on the value of its London City Airport by seeking a co- investor to take a stake in the project.

Mowlem owns 90 per cent of London's only inner-city airport, with David Goldstone, chairman of Regalian Properties, and his family holding the remaining shares. Kleinwort Benson has been appointed to consider offers, although BAA - which owns most of Britain's airports - has ruled itself out.

Roger Sainsbury, a Mowlem director, said the group had already had 'more than one approach' from investors interested in taking a stake in the development 'and we think this is an opportune time to consider offers'.

Since the runway extension - to allow BAe 146 jets to use it, a move seen as essential to its future success - was completed in April, there had been 'a lot of interest' from airlines keen on operating services from it. Mr Sainsbury said that passenger traffic, which was hit by uncertainty over the runway, was now recovering and was expected to be running at between 250,000 and 300,000 by the year- end, rising to the break-even level of 400,000 by the end of 1993.

The group intends to retain more than 50 per cent of the airport, although 'that is not an absolute dictum', Mr Sainsbury said. He added that it would consider selling the whole airport if an 'enormous offer' came along.

The airport is in Mowlem's books at about pounds 20m, although that is after a pounds 33m write-down in 1989, of which pounds 11m was a provision to cover future losses. Mr Sainsbury said the cost of rebuilding the airport now would be about pounds 50m, although the group hoped it would be worth more than the asset value.

The provision for losses has now been utilised and losses are charged directly to the profit and loss account. Graham Foster, a building analyst with the Nomura Research Institute, is expecting a pounds 3.5m loss this year, falling to pounds 2m next year.

He expects Mowlem to announce a pounds 7m interim loss, compared with a pounds 5m profit, when it announces interim results later this month, and believes the dividend will be cut from 5.65p to 2.5p.

Mr Sainsbury said the move was not due to the poor conditions in the building sector, and said Mowlem's balance sheet was strong.