Dawnay, Day faces asset sell-off at fraction of value

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The Independent Online

The vultures are circling Dawnay, Day International, the financial services group, as it faces selling off assets at a fraction of their value after calling in administrators. Several of its subsidiaries moved to distance themselves yesterday from the parent company's funding woes.

One broking rival said: "Companies are interested in its holdings, and we certainly had a look at their client list when we heard. It looks like Dawnay will have to sell very quickly to meet margin calls." The source added: "The underlying assets are fine, but if it is forced to sell in these markets, they will probably only realise a fraction of the value."

Guy Naggar, 67, and Peter Klimt, 63, who built the group from a shell operation in 1981 to a £2bn property and financial services empire, called in Ernst & Young this weekend as they fight to keep the business afloat. This comes at a time of personal trouble for Mr Klimt, who is caring for his son, in a coma since a traffic accident in March.

The crisis at the company emerged quickly, with insiders saying it was sparked by margin calls on Thursday that forced the sale of its 20 per cent stake in F&C Asset Management. The loss on its investment was some £80m, and the company also announced it was to divest its capital markets business. They sold more investments through contracts for difference yesterday.

Dawnay, Day launched a £750m refinancing operation just a few months ago, but as the markets have continued to deteriorate it has had to search for excess cash to meet margin calls.

Two of the group's listed property vehicles, which concentrate on investment in Germany and eastern Europe, were quick to distance themselves as legal entities. Dawnay, Day Carpathian said it was "totally unaffected" while Dawnay, Day Sirius said it "is solvent and is capable of continuing to perform its duties". A source close to the funds said they were seriously considering dropping the Dawney, Day name.

Dawnay, Day was set up in 1928 as an issuing house by General Guy Dawnay and Major Julian Day. It was bought by Jacob Rothschild in the 1970s, before being taken over as an empty shell by Mr Naggar, a French banker. Mr Klimt joined Mr Naggar two years later and the two built up the business through investing in UK commercial property and financial services start-ups. Before the collapse it had $4bn in assets and $6bn under management for clients.

Mr Naggar and Mr Klimt have grown their fortunes to a reputed £230m each. Investments include a 50 per cent stake in the company that owns The Wolseley restaurant in London.

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