Speyhawk admits defeat over debts and calls in receivers: Banks refuse more time to assemble refinancing package Shares suspended at 14p Osborne's stake valueless

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The Independent Online
SPEYHAWK, the property company, yesterday admitted defeat after 18 months of trying to put together a refinancing package for its pounds 360m debts, and asked its lenders to appoint a receiver. Price Waterhouse is expected to be confirmed in the post this morning.

The collapse comes despite signs that the four-year recession in the property market may be coming to an end. Agents are reporting an increase in demand for top-quality properties, which has sparked a small recovery in prices. That has fed through to property companies' shares, which have risen a third faster than the rest of the stock market since the beginning of the year.

Speyhawk requested the appointment after a meeting with its 46 lenders, led by Barclays - which is owed about pounds 50m - on Monday. At that meeting, Trevor Osborne, who founded the group and is still its chairman and chief executive, asked for more time to assemble the package, but the request was refused.

Mr Osborne said there was a 'general change of sentiment, a change of commitment', among the banks. 'They did not have the stomach to go through a long work-out period', he said. He attributed the change partly to the signs of recovery in the market, which could make it easier for receivers to sell off the assets to repay creditors. But that was denied by one of the lenders, who said it was still difficult to sell unlet development properties of the type owned by Speyhawk.

Speyhawk, which was founded in 1973, was one of the most prominent of the developer-traders that emerged in the 1980s. It borrowed heavily to fund speculative developments, which it hoped to sell at a profit as soon as they were completed and let.

The success of the strategy in the early 1980s sent its shares soaring to a peak of 585p in 1987, valuing the company at pounds 151.5m, while in 1990 it was in talks about a bid worth 350p a share, which was later abandoned.

But a surge of development in the City dramatically increased the supply of office space. On top of that, the recession cut demand, leaving Speyhawk with prestige offices for which it could not find tenants or buyers, and heavy borrowings that it could not service. Yesterday, its shares were suspended at 14p and there is little prospect of any return for shareholders. Mr Osborne's own 22 per cent stake, which was worth almost pounds 33m in 1987, is now valueless.

Its most prominent development is at Cannon Bridge station in the City, which is now 80 per cent let - largely to the London International Financial Futures Exchange - although the need to give rent-free periods to attract tenants mean it is not producing much income. Speyhawk also owns a building in St Mary Axe, which has had to be rebuilt after the first IRA bomb in the City.

The appointment of receivers surprised some observers, who believed that the banks were content to allow Mr Osborne in effect to wind up the company himself. A former president of the British Property Federation, Mr Osborne is widely respected in the industry. 'It comes at a time when we had more transactions in the course of delivery than at any time in two years,' he said.

But it also follows the completion of work on its two remaining developments, at Harrogate and Wimbledon, which means his development skills are no longer so essential.