C&W ponders £200m sale of UK properties

Cable & Wireless is considering selling its entire UK property portfolio in a move that would generate more than £200m for the troubled telecoms company.

Cable & Wireless is considering selling its entire UK property portfolio in a move that would generate more than £200m for the troubled telecoms company.

The sale could also lead to C&W moving out of its London head office in Theobalds Road, which came to symbolise the company's disastrous expansion into internet services.

A C&W spokesman said: "We have a sizeable portfolio of properties in the UK. We are looking at a range of options to improve our cost base and optimise our flexibility." He refused to comment further.

C&W has 180 freehold and leasehold properties in the UK. As part of the restructuring plans driven by chairman Richard Lapthorne, it made 1,500 people redundant in 15 months and many of its buildings are now sparsely occupied.

A source close to the company revealed that C&W had already held preliminary discussions with possible buyers. It is keen to tie up a sale agreement before the interim results on 10 November.

Because a buyer would take on a number of lease liabilities as well as the freeholds, the portfolio is expected to appeal to UK property companies or specialist funds rather than institutional investors.

A deal could be structured so C&W sells its properties to a company and then leases back the space it needs. Alternatively, it could consider agreeing a Private Finance Initiative-type deal where the investor also provides services and facilities for C&W over a fixed contract.

The cash raised from a sale would help to make up for the fall in C&W revenues. The company shocked the City last month by announcing that its first-quarter revenues had dropped from £869m to £798m on the same period last year.