View from City Road: No miracle on way to save Brent Walker

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As final preparations are made for George Walker's trial next month on charges of theft and false accounting his legacy, the Brent Walker leisure group has reported another set of losses which are of such mind-boggling size that they seem to belong more to Alice in Wonderland than to the real world. True, losses are down on the previous year, but at pounds 319m it's hardly much to boast about.

Borrowings are up to pounds 1.4bn while the deficit on shareholders' funds has risen to an astonishing pounds 863.3m. For such a puny little company these are staggeringly large figures, so much so that it's hard to take them seriously. Indeed, you shouldn't.

The pre-tax loss is struck after an interest charge of pounds 212m, which has never been paid because the company cannot afford to. So dire is its position that bankers are forced either to waive interest payments or convert them into equity of little or no value.

At the operating level, the performance is not too bad. The optimism expressed by the chairman, Sir Keith Bright, is nevertheless at best odd. As he announced the figures yesterday, he said he believed the company's difficulties were capable of resolution and he insisted the company could survive.

Goodness knows what kind of an audience he's trying to reach, for Sir Keith must know that this is ludicrous nonsense. There is absolutely no possibility of this company ever being worth anything for shareholders. A snowball in Hades would stand a better chance.

This is the reality. Brent Walker's equity interest in the William Hill betting shops chain might possibly be worth pounds 200m, but only if it significantly improves its profitability.

The Brent Walker pubs could be worth pounds 100m and the group's remaining portfolio of real estate pounds 50m. And that's it. Just pounds 350m to pay back pounds 1bn plus of debt which becomes due under the terms of the last restructuring in 1997. You don't have to be a mathematician to work out that Brent Walker will not come anywhere close to paying off its senior debt, let alone the accrued interest, shareholders, preference holders and convertible bondholders.

For some bizarre reason, a value (of 4.25p) is still assigned to the shares in the stock market. Miracles have been known to happen. It can be stated with certainty that they won't in this case.