Trafalgar writes down pounds 400m

TRAFALGAR House, the beleaguered engineering, shipping and hotels conglomerate, will today reveal pounds 400m of write-downs and provisions, double the amount the City had feared.

The figure is likely to include write-downs on the flagship Ritz hotel, valued in 1989 at pounds 85m, and its Cunard shipping fleet. It is also likely to make substantial provisions against the value of property used by group companies, which accounted for pounds 117.5m of the pounds 176.4m value of properties in the books at September 1992, as well as write-offs of development properties.

The pounds 400m provisions will effectively cancel out the impact of a pounds 400m rights issue of convertible preference shares to be announced tomorrow, leaving net assets virtually unchanged at about pounds 640m. But the issue should almost eliminate the group's borrowings. Trafalgar warned last month that it would have to make 'substantial provisions', on top of the pounds 100m provided in the first half of its financial year, following a detailed review. But most analysts had expected pounds 100m to pounds 150m of additional provisions, bringing the total for the year to between pounds 200m and pounds 250m.

The group has already written more than pounds 300m off the value of its assets in the past three years. The scale of the current year's write-downs has led some observers to suggest that Hongkong Land, the property arm of the Jardine Matheson group which owns 25 per cent of the group's shares, is determined to clear the decks at Trafalgar. It has already installed a new chairman - Simon Keswick, a Jardine director - and finance director. Next August Allan Gormly will be replaced as chief executive by Nigel Rich, managing director of Jardine Matheson Holdings.