Signet angry at call for `forced sale'

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The Independent Online

The war of words between Signet, the former Ratners jewellery business, and a group of dissident US shareholders continued yesterday when the company advised shareholders toreject plans for a wholesale break-up of the group.

Signet has been forced by a group of preference shareholders to call an extraordinary general meeting on 5 May to consider the break-up and sale of its main assets, which include H Samuel, Ernest Jones and the US chain, Sterling.

Signet has debts of £350m and owes a further £100m in unpaid dividends.

The preference shareholders, led by Sass Lamle Rubin, a US investment company, and UK Active Value Fund, want Signet to identify possible purchasers and present the best offers to shareholders within three months.

Yesterday, Signet's chairman, Jim McAdam, said: "It's a ridiculously short time-frame. This proposal makes absolutely no sense, and I'm confident that shareholders will realise that it is not in their interests and reject it. Putting the businesses into a highly public, three-month forced sale is certainly not the way to realise their full value."

However, one of the preference shareholders said yesterday that Signet had over-reacted. The UK Active Value Fund, which holds 25 per cent of the preference shares, said its intention was not to provoke a fire- sale but a valuation exercise that would enable shareholders to see how best to proceed. "They're being a bit hysterical," a spokesman said.

Mr McAdam pointed to improved profits, expected to rise from £1.7m to an estimated £8m for the year to 28 January after an interest charge of £33m.

While the UK businesses have turned a £1.5m loss into a £16m profit, US operations have continued to perform poorly. US profits are forecast to drop from £40m to £30m this year, caused by a downturn in the jewellery sector. Mr McAdam said fresh formats, such as new out-of-town stores, were being tested.

In Britain, improved marketing and store modernisations were expected to enhance performance.

Signet's banking facilities run out in June and the company is under pressure to arrange a re-financing. However, it is reluctant to take this step until the company is on a more stable footing. Mr McAdam said that he was not actively seeking buyers for any parts of the group but there were "no sacred cows".

Analysts believe the American business will eventually be sold and that a refinancing will follow. Nick Hawkins of Kleinwort Benson said: "It's not the right time to be selling. There's got to be a good chance that in 12 months' time these businesses will be worth more."

Signet's share price fell by 0.5p to 15p.