Property write-downs leave Bredero with pounds 106m loss: Banks agree in principle to refinance development

LARGE write-downs in the value of its properties sent Bredero, the troubled developer, plunging into the red to the tune of pounds 106.4m in 1992.

The group, which is 49 per cent-owned by Slough Estates, has been in refinancing talks with its lenders since breaching banking covenants in March.

Its losses have left the company with shareholders' funds of minus pounds 24.6m.

At the heart of Bredero's difficulties is Centre West, a massive office and retail development around Hammersmith underground station in West London.

The total write-downs of pounds 105m included pounds 77.7m related to Centre West, but Allan Chisholm, chief executive, said agreement had been reached in principle with the banks, led by Barclays, to refinance the first phase of the development.

He would not say whether the deal with the lenders would involve a debt for equity swap, but he hoped the details would be finalised shortly.

The original facility granted by the lenders to the project amounted to pounds 135m. Mr Chisholm said the current negotiations were for a much smaller facility. Discussions about the refinancing of the group as a whole were also in progress.

Bredero's net liabilities at the end of the year were pounds 24.6m, against net assets of pounds 82m.

'The revaluation of the properties was necessary to assess the situation for the refinancing. But it reflects market conditions at 31 December, which I believe will be seen as the bottom of the market,' Mr Chisholm said.

'There was a downward spiral following sterling's devaluation in October, involving a loss of confidence and a drop in demand, but the market appears to be recovering now.'

He added that lettings at Centre West were now going well, despite market conditions remaining tough.

Bredero has let one 80,000sq ft office block in the development to Coca-Cola for the soft drinks producer's European headquarters. Tesco and Boots have taken space in the retail part of Centre West.

There is no dividend and the shares fell from 12p to 71 2 p.