View from City Road: Greycoat alternative is receivership

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Its amazing what a bit of bribery will do. Judging by the 3.5p rise in Greycoat's preference shares yesterday, the offer of up to a 20 per cent stake in the company in exchange for a cut in nominal value will be enough to persuade the holders to lie down and play dead. But for every winner there is a loser, and here it is clearly the ordinary shareholders.

After the pref holders take their cut, and the UK Active Value Fund and its sub-underwriting circle have exercised their warrants, they could be left with as little as 65 per cent of the company - assuming they take up their rights. The rights issue requires them to cough up for five new shares for every one held, instead of four under the Postel plan. The pain is clear from the fact that the current proposal will leave an asset value of 14.8p a share compared with 16p under the previous offer.

Ordinary shareholders could now decide to scupper the alternative. But that would trigger immediate default proceedings. Given that no other offer has emerged in the month since the Postel plan was rejected, the warning by Geoffrey Wilson, Greycoat's chairman, that the alternative is receivership looks credible.

With debts of pounds 240m on net assets of just pounds 140m, there is some way to go before the company looks healthy again. Ordinary dividends are some way off and it is likely that Embankment Place will have to be sold if the company is to achieve its ambition of developing some of its sites.