Durlacher heading for big trading loss

Durlacher, the internet incubator and investment bank, warned yesterday it would report a big trading loss for the year to 30 June. It also announced revised terms for its £30m convertible debenture offering, while cancelling half the issue.

Geoffrey Chamberlain, Durlacher's chairman and chief executive, said the new convertible bond terms, which factored in revised conversion levels higher than the current share price, showed confidence in the company. Mr Chamberlain said: "It is recognition that value is not adequately reflected in a collapsed market."

Mr Chamberlain declined to predict when the company, whose shares have fallen 99 per cent from last year's highs, would return to profitability. In the six months to December, the firm posted a £13.9m loss compared with a £12.2m profit in the year to June 2000.

After an early 0.5p gain yesterday Durlacher closed unchanged at 4.75p. That values the group at £40m, down from £2bn at the apex of the internet boom.

Durlacher confirmed that market conditions for media, technology and telecoms stocks had worsened recently. The company said: "It is now well recognised that public market conditions, particularly in the TMT sector, have worsened over the past few months. Such conditions have continued adversely to affect performance."

In November, Durlacher issued convertible debentures to raise £30m in two tranches of £15m. Mr Chamberlain said yesterday that the original debenture holders had agreed to revise their conversion terms.

Holders of £5m of the debentures, together with interest on the whole of the unconverted debentures, have agreed to convert into Durlacher shares at 10p per share. A further £8.75m of debentures will become convertible at 25p after nine months.