Rank to sell off pounds 300m of assets

Click to follow
The Independent Online
Rank will announce a pounds 300m programme of asset sales later this week as a key outcome of the long-awaited strategic review conducted by its new chief executive, Andrew Teare.

The announcement will end weeks of speculation about the company over the direction Mr Teare will take to revitalise the leisure conglomerate, which he inherited from Michael Gifford, the 12-year veteran of Rank's executive suite, in April.

The company has already announced that Shearings, its coach holiday business, is for sale. Further disposals will include Rank Precision Industries, the lighting and cathode ray tube manufacturer, which was hived off from the Film and Television division earlier this year.

Mr Teare is also expected to outline his plans to unlock the potential of Rank's portfolio of brands. In particular, he wants to exploit Hard Rock Cafe, now that Rank has full control of the restaurant chain, and invest more in the company's Odeon cinema chain.

To achieve this, he intends to bring in "new blood" at management level throughout the company. The recruits will be charged with redirecting the pounds 1.2bn annual capital expenditure programme into areas where the company can see better margins.

This will lead to the opening of more Rank "multi-leisure" centres, along the lines of its successful combined bingo, nightclub, and restaurant operation in Hemel Hempstead. The loser in this shake-up is thought to be Oasis Holiday Villages, billed as an up-market rival to Center Parcs, which will have its programme of "glassed-in" British resorts scaled back from three to one.

But it is thought that market fears of a "kitchen-sink job" by Mr Teare, who made his name as an aggressive cost-cutter at English China Clays, will prove unfounded.

Mr Teare's initial view that Rank should have "direct management control" over its assets was interpreted as a sign that he was willing to abandon Rank's theme park joint venture with MCA/Universal. Mr Teare might encounter opposition if he tried to extricate the company from a complicated, but profitable, relationship, into which Rank has just sunk $400m (pounds 260m).

Analysts are hoping that Mr Teare will instead live up to his billing as a sensible strategist and not produce any nasty shocks. "We don't want him to get up and say 'God, this company's a mess'," said Bruce Jones, an analyst at Merrill Lynch.

However, those investors hoping to see the company divest its remaining stake in Rank Xerox, estimated to be worth close to pounds 1bn, are likely to be disappointed. Rank has indicated that no disposal is possible for tax reasons until 1999, and sources close to the company indicate that the proposed disposal programme will free up more than enough cash for new investment.