Stuart Lipton, chairman, said the Companies Act requirement was a technicality, adding that property values would have had to rise only 2.5 per cent since June to wipe out the shortfall. He confirmed that Stanhope was negotiating options for strengthening its balance sheet, where net assets fell from pounds 42m to a negative net worth of pounds 15.8m in the year to June 1993.
These are expected to include the issue of new equity and a restructuring of bank facilities. Issuing new shares would dilute existing shareholders who include Olympia & York, the Canadian property group that developed Canary Wharf, and Mr Lipton himself, both of whom own about a third of Stanhope.
Mr Lipton said: 'It is expected that this review will take some time to complete. The company said at the time of last year's statement that many commentators believed that the property cycle had reached the bottom, and that by the end of 1993 values and rents could start to rise.
'This belief has been fulfilled. The rapid and substantial fall in interest rates, resulting in property yields exceeding bond yields for the first time in a number of years, has benefited Grade 'A' buildings and led to an improvement in letting prospects.'
Stanhope last restructured its debts at the end of 1992. Borrowings at the end of June had fallen to pounds 132m from pounds 254m 12 months before.
Losses for the year emerged at pounds 62m compared with a deficit of pounds 213m in 1992. There was a loss per share of 37.4p (loss of 128.6p) and no dividend will be paid.
Mr Lipton said that the principal reason was a pounds 34m provision against the value of Stanhope's properties at Ludgate and Broadgate in the City and at Euston, and an interest bill of pounds 22.7m.
He said that Broadgate Properties (the joint-venture company with Rosehaugh, which includes the Ludgate development) was now 95 per cent let.
The financial position of the venture had been given a big boost by the sale last month of the building occupied by the European Bank for Reconstruction and Development to a German fund for pounds 179m.
The letting of 38,000 square feet of office space in the Ludgate development to Hill Samuel, the bank, was completed on Thursday and a deal with Banco Santander is expected soon. The shares fell 2p to 32p.Reuse content