Shares in Allied Leisure dive on pounds 16m losses: Founder and two directors step down after banking covenants are breached

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The Independent Online
INVESTORS in Allied Leisure yesterday saw their shares plunge 16p to 27p on unexpected interim losses of pounds 16m and disclosures that the company had breached banking covenants.

Richard Carr, the chief executive who founded the ten-pin bowling, disco and theme bar business, has resigned.

He founded Allied 16 years ago, taking on franchises from the Wimpy fast-food business.

He has a three-year rolling contract, but his compensation has been limited to pounds 180,000. This equals a year's salary, and includes a retainer for six months' consultancy work for Allied.

Mr Carr also sold 1.5 million of his 5 million shares yesterday, reducing his stake from almost 8 to 5.5 per cent.

Phillip Millward and Simon Nobel, directors, have also stepped down from the board to concentrate on operational affairs. Allied denied, however, that they had been demoted.

Damien Harte, who joined the group from Isosceles as finance director in November, said: 'Richard's departure was not an acrimonious split. He and the board recognised that the best way forward for the company was for him to resign.

'Phillip and Simon have not been demoted. We felt that in the next couple of months it was going to get very difficult, and we needed them to be hands-on managers.'

Results for the six months to 2 January were struck after pounds 14m of restructuring provisions. The bowling alley in Liverpool has been put up for sale, and two nightclubs with adjoining bars in Dundee and Bedford are being closed.

The three operations lost pounds 941,000 in the half-year, in sharp contrast to the performance of Allied's other 15 bowling alleys, three clubs and bar. Group trading profits were pounds 1.9m, down from pounds 2.9m. Pre-tax profits in the comparable period were pounds 2.1m.

The provisions, however, have resulted in gearing climbing from 25 to 60 per cent, putting it in breach of unspecified loans to value covenants placed on some of its debts.

Banks, including Midland, ANZ and Barclays Mercantile, have agreed to a three-month standstill on the repayment of some debts that had fallen due.

Allied has agreed to pay higher, unspecified interest charges on these debts. It has pounds 14m of term loans with an average maturity of 22 to 24 months.

The banks have also cleared Allied to pay the pounds 700,000 due in August on its tenancy in the lesiure complex being built in Crystal Palace, London.

The pounds 10m project has been delayed, but other anchor tenants for the hotel and cinema have signed up.