BM shares rise on news of Benford sale

BM, the loss-making engineer, yesterday ruled out a widely expected rights issue after the latest in an 18-month series of disposals. The market welcomed the news, pushing the shares up 6p to 50p, writes Tom Stevenson.

The sale of the dumper truck manufacturer Benford to Powerscreen for pounds 17m means disposals have netted pounds 120m since early 1993. Debts, which peaked at pounds 160m in June 1993, are now below pounds 40m.

BM, a former stock market star, was brought to the brink of collapse after the pounds 60m acquisition of the construction equipment maker Blackwood Hodge in 1990.

Instead of making BM a global force, it saddled the company with heavy debts and far-flung businesses. Its problems were compounded by an immediate slump in the markets it served.

BM said: 'The board believes that acceptance of this unsolicited approach will bring about a further significant reduction in borrowings without the need to seek fresh funds from shareholders to reduce debt.'

Benford, which was not part of the disposal plan, made a pounds 1m loss in the year to June 1994. In the previous year it made a profit of pounds 3.8m. Net assets were pounds 18.1m and the disposal will result in a pounds 1.1m write-down in BM's balance sheet.

In the year to June 1993 BM lost pounds 120m, prompting a call from one shareholder for an investigation of the role of the firm's auditor.