Trafalgar House was slammed by adviser

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AS Trafalgar House, the hotels to construction group, steels itself for an onslaught from its bid target, Northern Electric, documents obtained by the Independent on Sunday suggest that one of the group's harshest critics has been its own adviser, the Swiss Bank Corporation.

Northern Electric, the regional electricity company, has until tomorrow to produce its first defence case against Trafalgar's £1.2bn bid. Northern is understood to have hired a management consultancy, the LEK Partnership, to produce a detailed analysis of why Trafalgar is allegedly unsuited to own the power firm.

It could do worse than take some of the points made by Swiss Bank in a 32-page circular headed "Sell". It was published a year ago, but the author, Edward Hadas, said on Friday: "I stand by it. Some of the negatives in it are still understated."

In the circular, Mr Hadas, who now works for NatWest Markets, wrote: "I would be happy to recommend a purchase of Trafalgar shares on a speculative basis, were they cheap enough. If the shares were at 20p or even 40p, then the potential return would seemworth the risk. Such an attractive price is just not available right now at Trafalgar." On Friday, the shares closed at 69p.

Mr Hadas added: "I have four concerns - the shares are expensive, the company has a series of significant fundamental problems, the strategy articulated by the board seems financially and operationally extremely ambitious, and the wait for signs of progress is likely to be long."

A year ago, as Mr Hadas was putting the finishing touches to his study, Swiss Bank and the merchant bank Robert Fleming were staging an auction to place unclaimed shares from a £425m rights issue for Trafalgar's benefit.

Yesterday a Swiss Bank spokesman said: "The circular shows how much independence is given to our analysts, no matter what the corporate finance department may be doing."

A Northern spokesman said: "It's interesting that Swiss Bank seems to have been concerned about the future prospects of Trafalgar. We have always said that they are a financially challenged conglomerate."