Trocadero sale heralds fresh tack

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The Independent Online
Trocadero, the AIM-listed group headed by Nigel Wray, yesterday signalled its intention to get back to its roots in leisure with a deal worth up to pounds 210m to sell its main Trocadero and London Pavilion properties back to Burford, the property group from which it was spun out of in 1995, writes Magnus Grimond.

The group, which said it was actively seeking to appoint a new chief executive from the leisure industry, said the deal followed "disappointing" results from its new Segaworld entertainment centre within the Trocadero complex near London's Piccadilly Circus. One industry observer said that John Conlan, who recently left the First Leisure company, could be a candidate for chief executive.

Shares in Trocadero have slumped since peaking at 79.5p in August last year after analysts' profit forecasts were slashed as Segaworld failed to live up to expectations. Yesterday, the shares fell 2p to 28p.

Nick Leslau, who is to continue as chief executive of both Trocadero and Burford until a replacement at Trocadero can be found, said the decision to sell the two properties back had been prompted by "disappointing" earnings at the Sega joint venture. "It appears to be improving, but at the moment it appears unlikely to achieve its original budget for some time."

The demerger from Burford in November 1995 had been because Trocadero was a "hybrid", with shareholder returns from both assets and earnings, Mr Leslau said.

But the failure of earnings to materialise meant it had reverted to being a property company, with the situation complicated by last year's pounds 13m deal to buy rights to Enid Blyton characters including the Famous Five and Noddy.

The property deal would give Trocadero net cash of around pounds 73m after all financing commitments, he said. "It is an exciting business and will focus on media and brands businesses."

The deal involves Burford, which still owns 25 per cent of Trocadero, paying pounds 159m on completion, with the rest staged over the next three years. The sale will lead to an accounting loss of pounds 18m for Trocadero this year, but represents an underlying surplus of pounds 53m over acquisition and development costs.