Mowlem sighs with relief on pounds 15.5m disposal
End of a disastrous investment: Losing London City Airport finds buyer after months of negotiations
Tuesday 31 October 1995
The sale draws a line under a disastrous investment and while there was some disappointment that Mowlem had failed to achieve the airport's book value, the City was relieved that the company had finally negotiated a sale and the shares closed 9p higher at 63p.
The buyer is Dermot Desmond, former chairman of Dublin airport operator Aer Rianta, who knocked the price of the airport down after several months of negotiations. The strike price is pounds 4.3m below the value of the airport in Mowlem's balance sheet and, together with costs associated with the sale, will result in a pounds 5.5m charge against profits in the company's second- half figures.
The book value had already been written down and compares with an initial development cost of about pounds 30m and losses of almost pounds 20m in the eight years since the airport opened.
Ken Minton, Mowlem's recently installed chairman, said yesterday he was "absolutely relaxed" about the price achieved: "We've spent a lot of time with many people who have never even got close to putting bucks on the table. Now we've made the sale and, thank God, we have."
Mowlem, which announced a pounds 31.8m loss in the six months to June, has been trying to sell City Airport for several years as it attempted to refocus on its core activities. Suggestions that, having carried the airport for so long, Mowlem has sold out just as it starts to take off carry little clout with with Mr Minton, who believes the operation will not offer a decent return for years to come.
London City Airport was developed in 1987 as part of the planned rejuvenation of London's former docks but, like the rest of the property developments in the area, suffered in its early years from poor transport infrastructure. Passenger numbers did not start taking off until the Limehouse link by- passed the congested A13 out of London, putting the aiport within a short drive of the City.
Other key developments included an extension to the runway which allowed the airport to accommodate aircraft such as the BAe 146 "whisper jet" with a vastly improved range than the smaller planes that had previously used the strip.
Last year, 480,000 passengers used the airport, a 96 per cent increase over 1993. Despite the rise in volumes, however, London City remains a quick and easy alternative to the capital's other busy airports. Last year it made a loss of pounds 2.9m after hefty interest costs, but broke even at the operating level.
Mr Desmond is chairman of Dublin-based International and Underwriting, and is also a director and large investor in Pembroke Capital, a company providing specialist financial services to the aviation industry.
He was formerly the non-executive chairman of the state-owned Irish airports authority, Aer Rianta.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Rotten egg smell could help battle heart disease and Alzheimer's
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
£40000 per annum: Harrington Starr: Network Engineer (CCNA, CCNP, Linux, OSPF,...