View from City Road: A long wait at Trafalgar

The only surprise about Allan Gormly's departure from Trafalgar House is that he is staying on until August. In February, he was confident that the pounds 204.5m rights issue would be enough to put the group back on track and that a pounds 100m write-off left the property portfolio realistically valued. Eight months later, he is back with another pounds 400m cash call and a warning that practically everything Trafalgar owns is over-valued. Such a dramatic reversal would have been enough to send most chief executives straight out the door.

But Jardine Matheson is calling the shots at Trafalgar, despite having just a quarter of the shares. And if it decides that its latest investment needs more cash and a slimmed-down balance sheet, Mr Gormly has little choice but to agree. Small wonder that the non- executive chairmanship of Royal Insurance looks so attractive.

If only shareholders could manage such a painless exit. Until the details of the convertible preference issue are known (and eight weeks seems an unacceptably long time to wait) it is impossible to judge their attractions. What is certain, however, is that they will look a lot more attractive than the ordinary shares given that Simon Keswick, chairman, all but promised that the current year's dividend will be savagely cut (one of the few commitments Trafalgar looks certain to keep).

Jardine would argue that, without its involvement, neither of the fund-raising exercises would have been possible and Trafalgar would have been faced with the possibility of receivership. That does not make the result any more attractive. Mr Keswick talks about building up a portfolio of infrastructure projects where the returns could be delayed until 15 years after work begins. That may be acceptable for the subsidiary of a Hong Kong-based multinational; other shareholders are likely to balk at the risk.