Split over Wembley rescuers

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The Independent Online
THE directors of Wembley, the company that runs the Wembley Stadium and Arena as well as greyhound racing tracks in the UK and US, are at loggerheads over how to put the company on to a sounder financial footing, with chairman, Sir Brian Wolfson, looking increasingly isolated.

Three rescue plans have been presented to the board, and a decision was expected last Thursday. After lengthy meetings, however, the board remains undecided on which option to pursue.

According to sources close to the discussions, Sir Brian favours either of two proposals.

The first is from the US investment company, Apollo Advisors, and the corporate raider Bill Farley, who sits on the board of the textile manufacturer, Fruit of the Loom, with Sir Brian. Mr Farley and Leon Black of Apollo were associated with some of the highly borrowed takeover deals put together by Drexel Burnham Lambert in the US in the 1980s.

The second is from Harvey Goldsmith's Allied Entertainments, which would apparently involve Wembley making a pounds 20m takeover for Mr Goldsmith's company.

One possible stumbling block to Mr Goldsmith's involvement is a fear that other music promoters might boycott the venues if Wembley's links with Mr Goldsmith were perceived to be too close. Another drawback is that a takeover of Allied, even if accompanied by a share issue, would do little to cut Wembley's debt since Allied has relatively high borrowings.

Both the Apollo and Allied options would probably preserve Sir Brian's position at Wembley's helm.

A third option, preferred by some other members of the Wembley board, is a proposal from the City entrepreneurs Luke Johnson and Hugh Osmond, in which Wembley's banks, which are owed around pounds 150m, would swap some of that debt for equity. This would be supported by a rights issue to cut Wembley's borrowings substantially.

Under this scheme, Sir Brian would be unlikely to maintain a significant role.

Mr Johnson and Mr Osmond recently took control of My Kinda Town, the restaurant chain. Other planned deals involve a reverse takeover of PizzaExpress, the pizza restaurant chain.

The two entrepreneurs are in negotiation with Wembley's banks, led by Barclays. They feel that the operating businesses would flourish if they were not held back by the company's cash constraints.

Wembley is facing pressure from its bankers and shareholders for a financial restructuring following mounting losses. Earlier this year, the group announced pre-tax losses of pounds 65.7m after a pounds 98.3m property write-down.

The three parties involved have been asked by Charterhouse, the merchant bank handling the discussions, to provide further details before a decision is made.

Sir Brian is reported to have gone to South Africa, possibly in search of another possible rescuer. Wembley shares, worth 139p in 1989, now change hands at just 10p, valuing the company at around pounds 26m.

The company has promised its bankers to continue a steady stream of disposals.

(Photograph omitted)