Synstar shares slip on their first day

SYNSTAR, the computer services group, suffered an embarrassing stock market debut yesterday when shares in the company slipped below their issue price on their first day of trading.

The fall comes after Synstar and its financial advisers, Morgan Stanley Dean Witter, came in for intense criticism for the way they handled the flotation.

Shares in Synstar, trading on a when-issued basis, closed at 158p, 7p below the price at which they were sold to institutional shareholders. This fall was despite the shares being priced at the lower end of the 155p-185p range indicated by Synstar in its prospectus.

Analysts said Synstar, which was bought by its management from the leisure and hotel group Granada in September 1997, was coming to the market before it had established a track record. They also accused CVC Capital Partners, the venture capital group which backed the buyout, of demanding too high a price.

At a share price of 158p Synstar, which raised pounds 90.5m in new capital from the flotation, is capitalised at pounds 257m. At the time of the management buyout it was valued at just pounds 89m.

Meanwhile, Morgan Stanley came under fire for refusing to send information on the flotation to City analysts. Experts who have seen Synstar's prospectus have raised questions about the company's depreciation policies and possible liabilities arising from the millennium computer bug.

"The whole float has been handled in a shabby way," one analyst said yesterday. "It's made everybody very suspicious and you can see that in the share price reaction."

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