How worthy is loch's fare? £40m, if oyster chain is sold

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The Independent Online

For almost quarter of a century, customers and visitors to the original Loch Fyne restaurant in Argyll have wondered at the Gaelic motto above the fish counter which translates as " How worthy of honour is the sea" - the answer, according to financial experts, could now be about £40m.

For almost quarter of a century, customers and visitors to the original Loch Fyne restaurant in Argyll have wondered at the Gaelic motto above the fish counter which translates as " How worthy of honour is the sea" - the answer, according to financial experts, could now be about £40m.

Yesterday, Loch Fyne Restaurants, the 28-strong chain of eateries which evolved from the eponymous Scottish oyster farm and original restaurant, announced plans to put the business up for possible sale.

LFR plc, which comprises the Loch Fyne Restaurants and Le Petit Blanc brasserie brands, instructed the financial advisers Noble & Co to " carry out a strategic review and advise on possible alternatives for shareholders to realise the value of their investment" .

Possible options available include a sale to a rival or a private equity firm or a stock-market flotation which could net the shareholders anything between £30m and £40m - a long way from the early days of the 1970s when the Loch Fyne concept was born out of necessity to finance a struggling family estate.

In 1978 the late Johnny Noble, who had inherited the 80-room, turreted mansion of Ardkinglas House, and family estate, on Loch Fyne in Argyll, was anxiously looking for an alternative to the traditional cattle farming on the estate.

When his friend Andy Lane, a marine expert, suggested they try growing oysters in the clear, unpolluted waters of Loch Fyne, a business was born selling seafood which has become a byword for quality around the world. It is exported to more than 22 countries and has become a favourite with celebrities including the Hollywood actors Clint Eastwood and Dustin Hoffman.

Initially the two men began selling their wares from a box next to the main road at the head of the loch.

As word-of-mouth generated more custom they progressed to a shed and a couple of cable drums, which acted as makeshift tables, before eventually converting a former cowshed by the water's edge into what has become the original Loch Fyne restaurant.

As their reputation for quality seafood spread, Noble, a consummate showman, helped publicise his wares by travelling to London in Highland dress to set up a barrow on Knightsbridge Green, opposite Harrods.

By the early 1990s Noble and Lane were harvesting more than one million oysters a year from the loch, exporting around the world and had expanded their business with the opening of two restaurants in Nottingham and Elton.

However, both men quickly realised they needed expert help if they were to venture any further into that side of the industry.

In 1997 Noble recruited Mark Derry and Ian Glynn, who had made their name with a string of successes including TGI Friday, and the four men launched the first restaurant under the LFR plc banner in Cambridge.

Noble died in 2002 and the original restaurant at Cairndow near Inverary - which last year became the focus of media attention when Gordon Brown and John Prescott held a clandestine meeting in the car park - was sold to its 100 employees for about £5m.

However, the restaurant business, under the management of Mark Derry, continued to expand and now has 27 seafood restaurants around Britain, including a 75 per cent stake in five of Raymond Blanc's Le Petit Blanc chain, and more sites are due to open over the next 12 months in Poole, Ipswich, York and Knutsford.

"Despite what may be happening in other parts of high street UK, current trading at both Loch Fyne Restaurants and Le Petit Blanc is robust with combined like-for-like sales to date ahead of last year," said Mark Derry, the chief executive, yesterday.

"It seems that our promise of serving fresh, ethically sourced food with impeccable provenance has made a mark with our customers."

Last year the business reported a 32 per cent jump in pre-tax profits to just over £1m from turnover up 27.6 per cent to £27.9m. This year it is tipped to deliver earnings before tax of about £4m.

"The board has been considering the best way for shareholders to realise the value of their investment in the company," said Jeremy Hardie, LFR plc chairman, at the group's annual general meeting yesterday.

"There will be a period of intensive assessment where all options - sale, float or refinancing - will be explored, as well as that of maintaining the status quo through continued growth from our own cashflow."

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