Thistle cautious over float price

Thistle Hotels took its cue from the recent postponement of Lonrho's hotel division spin-off and steered a cautious line on the pricing of its forthcoming flotation yesterday. Robert Peel, chief executive, restated his confidence that there would be plenty of demand, but the valuation range he unveiled was below more optimistic expectations earlier in the summer.

Although the company has never commented officially on what it hoped to raise, the market had been led to expect a market value on flotation of up to pounds 1.5bn. The expected offer price of between 170p and 210p would value the four-star chain between pounds 1.05bn and pounds 1.24bn.

One banker involved in the flotation said he was relieved by the pricing. He added that at anything over pounds 1.2bn, the issue would become increasingly less attractive.

There has been a steady stream of hotel company flotations this year and some in the City are beginning to worry that investor appetite may be on the wane.

Unveiling a forecast of at least pounds 100m in operating profits for the current year compared with the pounds 89.3m achieved in 1995 and the pounds 60.4m and pounds 74.3m of the previous two years, Mr Peel insisted that Thistle represented a focused investment in the UK hotel industry and offered a strong exposure to the booming London market, where it is the biggest hotelier ahead of Granada.

Had the shares been listed for the whole of the current year, the company said, a total dividend of 3.7p per share would have been paid giving a gross yield of between 2.2 and 2.7 per cent.

Thistle also confirmed yesterday that Brierley Investments, which owns 70 per cent of the shares, would be reducing its stake by selling 17 per cent of its holding. Two investment arms of the Singapore government, which own the rest of the shares, would be selling a similar proportion.

Share applications by private investors must be with intermediaries by 27 September.

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