Signet pressed to restructure

TWO South African financiers, Brian Myerson and Julian Treger, are threatening to force a financial restructuring at Signet, the former Ratners jewellery chain, which announced its long-awaited results last Friday, writes David Hellier.

Signet announced a group loss for the year of pounds 85.5m after a provision of pounds 87.1m to cover the book value losses resulting from the proposed sale of Salisburys, its loss-making chain of luggage shops.

The chairman, James McAdam, also announced that the Ratners name would disappear from the group's shopfronts.

Messrs Myerson and Treger, who specialise in corporate recovery situations and scuppered plans last year by Postel, the Post Office and telecommunications workers' pension fund, to restructure the Greycoat property group, hold more than 20 per cent of Signet preference shares.

'The management is only putting off the inevitable,' Mr Treger said. 'We shall take steps in the next two months to try to sort out the situation.

'We think that the management should be more proactive. It would be one thing if they can trade out of the situation, but it's just not looking likely.'

Signet's main problem is servicing its large borrowings - pounds 300m of bank debt and pounds 550m of preference shares.

Mr Treger thinks Signet's opportunities to cut costs and expand profit margins are severely limited. On Friday Mr McAdam admitted that the scope for additional reduction in costs was not great but that savings would result from the current business review.

Preference shareholders - who have around 29 per cent of the voting rights - can call a special meeting to make proposals, including appointing sympathetic directors.

Mr Treger and Mr Myerson could also use their shareholding to block restructuring proposals they do not agree with. Any restructuring plans require approval of 75 per cent of the preference share vote.

Signet last week again passed on paying a dividend to either preference or ordinary shareholders. Arrears on the preference shares are at pounds 64m and are rising by pounds 30m a year.

In the meantime, Signet continues to argue against a full financial restructuring. On Friday it said that 'the major part of the reorganisation programme is now complete'.