Banking sources say that hopes of saving Stanhope, which is labouring under a mountain of debt, are receding fast. However, Stuart Lipton, chief executive, may still be able to pull off a surprise rescue deal with one of three parties he says are interested in joining in a restructuring of the company.
Amid the gloom, Stanhope's shares have fallen from 24p to 19p, their lowest for the year, in the past two weeks. They have been as high as 50p this year.
News that Mr Kershaw has sold most of his shareholding is bound to worry property watchers. He was one of Mr Lipton's close allies during Stanhope's spectacular rise, which included the high-profile development of the Broadgate Centre in the City of London.
He resigned in October 1992, as the full blast of the property slump hit the company. He has since moved to Kuala Lumpur, the capital of Malaysia, where he is involved in property development.
Last week, Mr Kershaw visited Stanhope's London offices. 'He knows nothing about what is going on here,' Mr Lipton said last week. 'He was selling shares before he came in to the office.'
Mr Kershaw has sold 200,000 shares in Stanhope over the past two weeks.
Meanwhile, Mr Lipton confirmed that his company was in talks with its bankers and he, at least, sounded confident about the outcome. 'We are continuing negotiations with our banks, and we are talking to a number of interested parties, including British Land, about a possible restructuring,' he said. He declined to name the other parties.
All options are being considered in the crunch talks, including the sale of a number of peripheral operations and raising more cash from outside investors. However, many in the City say that receivers could be called in within the next few weeks.
Stanhope was refinanced in January 1993, when its bankers agreed new loans that come up for renewal in December 1996. But they are subject to continuing compliance with specified covenants and - crucially - to review by the banks at the end of this year and next. The banking consortium is headed by Barclays, and its merchant bank adviser is Schroders.
Any move to wind up Stanhope would be a sad end for Mr Lipton, who is seen as one of Britain's most talented and visionary property developers. His company was caught out by the severity of the recent property crash, leaving it with debts of around pounds 130m.
One hope is that John Ritblat, who runs British Land and owns a 29 per cent stake in Stanhope, could ride to the rescue and buy the company. Mr Ritblat paid around pounds 5m for his stake, although Mr Lipton tried to block it going to him with an unsuccessful court action.
The gravity of Stanhope's current situation has caught some property watchers in the City off-guard. Many thought that the worst was over and have expected institutions to put up more cash under the terms of a project codenamed 'Operation Phoenix'. Some insiders, however, say this plan appears to have collapsed and leading banks in the consortium are worried that while property prices and rentals are recovering, Stanhope will still struggle to repay the loans.
There were rumours a few months ago that a large chunk of Stanhope debt had changed hands in the secondary market for a price of only 30p in the pound, which confirmed the mood of pessimism in the City.
Stanhope still hopes to persuade its bankers that it can reduce costs by selling its interior- fitting operation. But, although big contractors such as Bovis and Taylor Woodrow might buy the business, it would not fetch enough to cut Stanhope's debts significantly.
If Mr Lipton, who still owns a large shareholding, can find a buyer for the rest of the business, he may still be able to get out with more than pounds 2m in his pocket. But there is a growing feeling that he may have missed his chance.
'We have reached the end of the line for Stanhope. It is difficult to see how they can survive in their current shape, and they may not survive at all,' said a property source close to the talks. He added: 'But Stuart could still pull a rabbit out of the bag.'
Stanhope, together with Rosehaugh, which is in receivership, owns Broadgate, one of London's most prestigious office complexes. It also owns a number of other high quality properties. However, British Land is believed to be interested only in buying the Broadgate properties.
Mr Lipton has the difficult task of trying to balance the interests of the company's bankers and shareholders.
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