Lonrho in hotel sell-off

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The Independent Online

Lonrho Africa is close to selling its hotels business - which includes the world-famous Norfolk in Nairobi and the Mount Kenya Safari Club - for around £25m.

Starwood Lodging, the owner of the Sheraton chain, is behind the purchase, though the deal will be complex and will involve a number of parties.

The negotiations for the sale have been complicated by the typhoon that has hit Mozambique, where Lonrho Africa's Lambadi Beach Hotel is based. Though the hotel is in an area unaffected by the flooding, tourism in the country has collapsed because of the disaster and this led to last-minute talks to cut the sale price.

The sale of the hotels will come as a relief to Lonrho Africa shareholders, who are becoming increasingly concerned about the fate of the company. The group contains the rump of African businesses collected by the late Tiny Rowland when he ran the Lonrho empire; it survived an attempt to oust its management a little over a year ago.

Lonrho Africa has yet to publish its full-year results, despite its year-end being on 30 September, and has until the end of this month to do so.

A spokesman said that Lonrho Africa now plans to publish the figures on 29 March. The delay has been caused partly by difficulties in completing the hotel's sale and partly by the illness of Mark Newman, Lonrho Africa's chief executive, who has suffered a stroke.

The group's broker, HSBC Securities, is predicting losses of £37.9m. The poor performance will be largely attributed to the troubles of the group's agribusiness, which has suffered due to the fall in cotton prices. Lonrho Africa said last summer that it was attempting to sell its cotton interest, but has yet to find any buyers. A management buy-out of the Zimbabwe operation is understood to have collapsed.

Lonrho Africa shares now stand at 23.5p, less than a third of the price they were when the company was demerged from the old Lonrho, now renamed Lonmin, two years ago.

Within a matter of months of the demerger, one of the group's largest shareholders, Blakeney Management, launched an attempt to oust the chairman, Bernard Asher. This was bought off by concessions that allowed Blakeney to have board representation and push through a strategy of selling off much of the company's businesses.

Lonrho Africa's critics argue that the group is unable to strike the sort of deals that made Tiny Rowland's Lonrho such a power in the continent.