Burt fund raises bid for London Scottish to £165m

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The Independent Online

Promethean, the investment vehicle launched by the ITV chairman Sir Peter Burt, was finally granted access to London Scottish Bank's data room yesterday, after agreeing to sweeten its £165m unofficial offer for the group.

LSB, which specialises in lending money to people with poor credit histories, first received an informal 115p-a-share offer from Promethean three weeks ago.

Although shares in the company initially went through 118p a share, in anticipation of a bidding war, the stock has drifted in the weeks since over fears that the Promethean offer may never materialise. In a short statement yesterday, LSB said only that it had agreed to "grant reasonable diligence access to Promethean" after receiving an increased offer from the company.

However, it warned its shareholders that there was still no certainty that a formal offer would be forthcoming, and refused to disclose the size or terms of the sweetened bid.

LSB has struggled in recent months after a rise in bad debts drove the company to a 22 per cent fall in profits last year. Its shares were also hit again last week, when the preliminary findings of an inquiry into the doorstep lending market - in which LSB has been a key player - suggested that the industry was ripping off its customers to the tune of £100m a year.

The Commission is now considering imposing a number of restrictions on the home credit market to encourage competition and help bring down interest rates. Although these are expected to stop short of imposing a cap on interest rates, the Commission has said it will still consider introducing a cap if its initial remedies are unsuccessful.

Shares in LSB rose almost 6 per cent yesterday on news of the sweetened offer. However, at 107p, they remain well below the level of even Promethean's original unofficial bid. If Promethean is successful in its approach for LSB, it will be the company's first major purchase. Promethean was set up by Sir Peter Burt last summer, but is now run by his son, Michael.