Mayflower pessimistic on debt talks

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The Independent Online

Mayflower, the ailing bus builder, yesterday appeared to be slipping towards bankruptcy as it asked for its shares to be suspended with immediate effect. A statement from the group said that current negotiations with its lenders were unlikely to prove successful.

Mayflower, the ailing bus builder, yesterday appeared to be slipping towards bankruptcy as it asked for its shares to be suspended with immediate effect. A statement from the group said that current negotiations with its lenders were unlikely to prove successful.

The company delivered a double barrel of bad news on Monday, announcing management changes which included the ousting of the chief executive, finance director and joint managing director, and reporting "accounting irregularities" in its main bus-building business, TransBus, which would increase net debts by £20m to possibly as high as £196m.

The group also delayed the publication of its 2003 results for a third time, until next month.

Monday's stock exchange statement sent its shares tumbling, slashing one-third off the value of the company to leave it with a market capitalisation of £22m. In its heyday Mayflower was valued at £985m.

Also on Monday Mayflower submitted to bid talks with Melrose, a shell company formed by the three businessmen who once ran the mini-conglomerate Wassall, and last night the bidders were waiting for more news.

Peter Jones, an analyst at KBC Securities, said that yesterday's statement may have been prompted by Mayflower's disclosure on Monday about its increasing debt levels. "The banks may have pulled back because of that news. No one can be optimistic," he said.

"Once you get to this point your future isn't really in your hands. There are options but they'll have to look at them carefully and quickly," he said, in reference to the company's statement that the board was reviewing the situation.

Commenting on Mayflowerr's prospects, Mr Jones said: "All of this doesn't have the flavour of good news about it."

Mayflower has obligations worth £70m that it must meet by January 2005, and a further £90m by the following January.

The company's shares were suspended at 6.25p on Monday night. Only six months ago the shares were trading as high as 35.5p.

Alan Jamieson, named on Monday as Mayflower's new chief executive, was previously head of PricewaterhouseCooper's insolvency department. He was brought in last month to help with restructuring. Bruce Wright will be joining as interim finance director.

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