Trencherwood agrees deal with bankers

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The Independent Online
THE DIRE state of the property market has forced Trencherwood to agree outline terms of a debt- for-equity swap with its bankers.

It also announced yesterday that it lost pounds 37.7m in the year to 31 October. The losses are 30 per cent higher than its total turnover in the year.

Much of Trencherwood's pounds 37m loss is a result of a pounds 29.9m property write-off. Last year it wrote off pounds 23.3m and it now has negative net assets of pounds 12.5m.

The company is caught in one of the worst sections of the troubled property market. It has a large exposure to residential housing development land in south- east England.

It said yesterday that it had secured agreement in principle with Midland Bank, Royal Bank of Scotland and Schroder Wagg about a reconstruction of the group's finances.

Roger Brooke, finance director, said the deal might include ordinary shares, preference shares or a mixture. But he added that it was unlikely the banks would end up with more than 50 per cent of the company.

Any deal struck will be similar to arrangements made by the leisure company Brent Walker and the advertising concern WPP.

However, because Trencherwood's chairman, John Norgate, owns 60 per cent of the company, any possible debt-for-equity swap will be easier for the board to implement.

On and off-balance-sheet borrowings total pounds 60m, down pounds 10m on the comparable figures. However, interest payments rose to pounds 7.3m from pounds 3.8m because Trencherwood was bound by more demanding costs relating to off-balance-sheet debt.

None of the interest liability is covered by profits. Trencherwood made an operating loss of pounds 863,000 in the 12-month period.

Under the draft restructuring plans some debt will be converted to shares. It is also proposed that Trencherwood benefits from additional loans, repayable by the end of 1997.

Mr Brooke said the banks were keeping the company afloat because it owned large areas of prime residential development land in Berkshire.

While values have disintegrated over the past two years, Mr Brooke said agreement on the restructuring would signify bankers' confidence that the market, and Trencherwood, would recover.

The loss per share for the year to last October was 137p against 102p.

Trencherwood shares were trading at above 400p in 1987. A year ago the price was 40p. Yesterday the stock was unchanged at 7p.