Tiphook plummets on profit warning: Leasing group has debts of pounds 1bn and will make first-half loss Articles of association to be changed

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TIPHOOK, the controversial transport leasing group, saw almost half its stock market value wiped away at one point yesterday after it issued its third profits warning this year.

The company said it was in talks with lenders as it was in danger of breaching banking covenants. Its debts of more than pounds 1bn stand at almost five times shareholders' funds.

The shares, which fell on the news from 239p to 128p, recovered later in the day to close at 169p.

An extraordinary meeting will be called to change the company's articles of association, which state that gearing must not exceed 500 per cent.

The profits warning said that market estimates, ranging between pounds 25m and pounds 35m, were higher than internal forecasts.

The statement added there would be a first-half loss, but that Tiphook was expected to return to profit in the second half. Analysts said that profits could come in anywhere from nothing to pounds 10m.

The announcement is the latest in a series of crises to hit Tiphook this year. The company lost pounds 21.8m before tax in the year to April, after accounting changes were introduced designed to bring it more into line with US standards.

Roger Braidwood, the finance director - who justified the move on the grounds that about half of Tiphook is owned by US investors - resigned shortly afterwards.

An adviser to the company said that the announcement showed the company's culture had changed and that bad news was being communicated to the market immediately.

Tiphook has been dogged by suspicion in the City, following leaks and bear raids before announcements.

The adviser said that Morgan Grenfell, which recently replaced Lazard as the company's merchant bank, and College Hill, its new public and investor relations adviser, had insisted that Tiphook make an immediate announcement when it became clear profit forecasts were wildly out.

He added that the new finance director, Andrew Chandler, was good at standing up to Tiphook's colourful chairman and chief executive, Robert Montague.

City observers said that Mr Montague, who founded Tiphook, would come under increasing pressure from investors to relinquish one or both of his roles. But the Tiphook adviser said that Mr Montague remained an asset to the company. 'He's a buccaneer, but he knows the business inside out. The point is that he's now been reined in and is under control. He has to listen to what his advisers and his new finance director tell him because he can't afford any more debacles.'

Scottish Amicable, the life insurer that is Tiphook's largest UK institutional shareholder, was due to meet the company yesterday. However, Tiphook cancelled the meeting on Wednesday evening.

Douglas Ferrans, a director of ScotAm Investment Managers, said: 'It was the right thing to do. If they were going to make an announcement to the Stock Exchange, there was no point in seeing us.'

He added: 'We have been supportive in Tiphook's time of trouble. We are still in there and still supportive. We are not rushing for the exit.'

But analysts said the patience of shareholders, particularly in the UK, was wearing thin.

(Photograph omitted)