Ronson loses control of property empire

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GERALD RONSON, the self- made property tycoon jailed for his role in the Guinness scandal, will lose 95 per cent control of the property and motor trading empire he built up over 30 years.

The move is part of an pounds 800m refinancing plan to save Heron International, Mr Ronson's privately owned master company, from collapse.

At its peak during the 1980s property boom, Heron was estimated to be worth considerably more than pounds 1bn. However, it ran into severe financial difficulties after the property slump and a disastrous expansion into the US.

Under the rescue proposal Mr Ronson will give up control over Heron and is expected to step down as its chairman. Although he will continue as chief executive, Mr Ronson's long-term future with the group he created will depend on its ability to repay creditors in the next five years.

His ocean-going yacht, My Gail III, named after his wife and owned by the company, has been up for sale for several months. His pounds 1.1m salary will be slashed to reduce costs. The group is also planning substantial redundancies from its 1,600 head-office staff.

Heron's problems stem from about pounds 1.5bn debts owed to a syndicate of banks and investors in the company's bonds. In March it was forced into rescue talks with creditors as a result of the recession. A further deterioration in trading conditions and a strong rise in the dollar have pushed it into even deeper problems.

As a result, the company's balance sheet has worsened to a pounds 225m overall deficit.

Mr Ronson began his career after leaving school at 15 by joining his family furniture business. He subsequently sold the business to move into petrol retailing, and later into property, and ownership of Suzuki and Rolls-Royce car dealerships.

Widely admired for his business acumen in the City, Mr Ronson's fortune took a dive after his conviction in the Guinness takeover scandal. He spent six months at the Ford open prison for his part in an illegal share support operation. By the time he was released in March 1991, Heron had been seriously hit by the recession.

The refinancing plans involve the conversion of pounds 400m head office debts into equity, which will reduce Mr Ronson's stake in the group from 100 to 5 per cent. Full repayment of its remaining debts would, however, increase his stake to 15 per cent.

A further pounds 375m of debts are to be refinanced into new loans. Bondholders will receive about 40 per cent of existing claims while bank lenders will obtain 35 per cent. Heron is expected to receive additional bank loans of pounds 20m.

The proposals will need the approval of the group's creditors who are expected to make a final decision early next year.

However, the group plans to repay its remaining debts by a disposal of property and other assets over the next five years. The sell- offs include Heron's UK petrol stations and Suzuki car and motorcycle franchise for pounds 55m.

Mr Ronson is in discussions with an investor group to buy out the two businesses from Heron.