Shares slip as Westminster pulls issue

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Westminster Health Care, the nursing home company, has pulled a rights issue at the last minute as a major investor refused to participate, according to City sources. The news caused the company's share price to fall 38p to 293p, despite a good set of interim results.

City sources say a one-for-three rights issue, which was expected to be announced yesterday, was pulled because the largest shareholder, National Medical Enterprises of the US, did not want to participate.

NME, which now owns 42.2 per cent, once owned the whole company and the City fears that this refusal to invest signals an intention to sell its shareholding in the company in April. That is when undertakings not to sell, which were given at the time of Westminster's stock market flotation in 1993, will expire.

Harald Hendrickse, an analyst with Smith New Court, said: "They told us they had talked to a number of institutions, but they have decided the timing is not right. The market seems to be thinking this indicates a lack of support for Westminster."

The company was not immediately available for comment on the rights issue reports.

A spokeswoman for NME insisted it would have participated in the rights issue had it gone ahead. She blamed its failure on stock market conditions.

Westminster needs the money to finance a capital expenditure programme of £45m to fund its plan to increase the number of beds it runs by more than 1000 during the current year.

Despite the bad news about the rights issue the company met market expectations when it reported its first half results. Pre tax profit increased 21 per cent to £6.3m for the six month to the end of November on turnover up by 37 per cent to £32.7m.

The turnover increase came on the back of expansion in bed numbers during the year. The company now operates over 4500 beds and is Britain's second largest nursing home operator.

Mr Hendrickse said he believed the company to have good prospects in the longer term. his view is supported by Richard Williams, an analyst at UBS who is pencilling in £13m pre tax profit for the full year, which would give an earnings per share of 21.1p and a prospective p/e of 13.8. Mr Williams said: "I am very keen on this stock. It's in a strong sector and Westminster's fundamentals are sound."

The company made £11.9m last year.

Pat Carter, chief executive, said: "Growth has been driven by adding beds and we are looking for that growth to continue throughout next year." The company aims to have 6,000 beds in operation by May 1996.

Earnings per share are up by 18.6 per cent to 10.2p. The interim dividend is 2.1p, up 20 per cent on the previous year.