Stakis rights unlocks bank handcuffs

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STAKIS, the hotels and casinos company, has unlocked the banking handcuffs placed on the group nearly two years ago by making a pounds 28m rights issue and selling its Ashbourne nursing homes business for pounds 50m.

The shares rose 4p to 45p on the announcement, which accompanied the firm's results for the year to 27 September.

The debt standstill arranged with 21 banks in March 1991 - when Sir Reo Stakis, the founder, handed over the chair to Sir Lewis Robertson - has been lifted.

Sir Lewis said Stakis would now be backed by just nine banks, and only those 'having, and wanting' to retain, a relationship. There were, he added, 'too many banks and several of them were unenthusiastic in their support'.

He predicted that Stakis was 'on the move again', having overcome a 'quite serious mismatch between financing capacity and development ambitions'.

The sale of Ashbourne, which is being bought by a venture capital syndicate headed by Electra Kingsway, will leave Stakis with two core divisions - hotels and casinos. The exit from property should be completed this year.

Sir Lewis said the decision to sell Ashbourne, which made pounds 3.4m of profits in 1991/2, was taken because Stakis could not provide the 'very substantial funds' needed for development.

Hotels and casinos increased operating profits from pounds 13.7m to pounds 20.5m, and have continued to advance since the year-end.

The group results, however, were again marred by heavy write-offs. A pounds 48m loss on the sale of the healthcare business resulted in a retained deficit of pounds 48.6m, against pounds 50.9m last time.

Shareholders' funds fell from pounds 303m to pounds 255m, but the one-for-three, 32p per share, rights issue and the disposal cut debt from pounds 197m to pounds 120m. Gearing falls from 77 per cent to 42 per cent.

Sir Lewis also denied reports that because he was 70 he was about to retire, and drew on a near 50-year-old Churchillian quote to say that yesterday's package 'amounts to more than the end of the beginning of recovery'.

He backed that statement by announcing a final dividend, albeit halved at 0.45p.