View from City Road: The death knell for Ferranti shareholders

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Cynics might suggest that now Lord Weinstock has had a good look at Ferranti's books he is walking away from his scarcely generous 1p-a-share or pounds 13.7m bid with a view to buying bits from the receiver for even less.

A dignified retreat now was preferable to being scuppered by the antics of John Katz. His self-defeating campaign on behalf of small shareholders would have stopped GEC securing the necessary 90 per cent acceptances.

But in essence such suggestions are a back-handed compliment to the prudent negotiating tactics that Lord Weinstock has employed these past years. The discovery of materially adverse financial information in Ferranti by GEC, the reason cited for its withdrawal, is alarming.

In effect it kills any hope of a third party coming in and so sounds the death knell for shareholders. Considerable doubt is also cast over the status of the pounds 155m owed to Ferranti's banks and other creditors.

Unlike Brent Walker and its William Hill subsidiary, Ferranti is inherently unprofitable as constituted at present and has few assets to sell; so a financial restructuring as an alternative to receivership or takeover never looked on the cards.

GEC will undoubtedly do well out of Ferranti's demise if it strikes a deal with the receiver, which will no doubt be even more galling for shareholders and creditors alike.

GEC's natural caution was also on display in its half-year report yesterday. After producing figures at the top end of expectations it successfully reined back analysts' forecasts for the year to an easily achievable increase of 4 or 5 per cent. Yesterday's share price fall offers a good buying opportunity.