European Leisure plans 77m pounds debt restructuring

EUROPEAN Leisure has returned to profits but admits that trading alone is unlikely to solve the problem of its debts which, at pounds 77m, are more than twice its net assets of pounds 34m.

Ian Rock, chief executive of the owner of London's Camden Palace and Hippodrome discos and 70 snooker halls, said: 'We are in the process of discussing with our banks about the way forward.

'We can get debt down by trading, which is a long haul, or we can make significant disposals, which we don't want to do.'

A straight cash call on shareholders would be difficult, he said, considering the depressed state of European's share price, which rose 1.25p to 5.5p yesterday. He would not be more specific about the bank talks, but did not dismiss the possibility of a debt-for-equity swap and cash injection.

European is in debt to eight banks, of which Barclays is the largest lender. Current borrowing facilities expire in July.

Trading conditions remained difficult in the six months to 31 December, but a pounds 54,000 profit was in sharp contrast to the pounds 46m loss in the same period in 1991.

The exit from France and Spain is virtually complete, with just one restaurant and disco remaining respectively in each country.

Gross first-half disposal proceeds, however, totalled just pounds 2.6m, and hardly scratched the surface of the debt problem.

European is locked into fixed interest charges until next month, so finance charges rose slightly from pounds 3.7m to pounds 4.1m.

Divisional trading performances were mixed. Discos had the hardest time, particularly the company's London venues, where attendances and spend per head continued to fall.

Snooker operations and the company's amusement machine maker, Maygay, fared better. Turnover and profits from the snooker halls rose, and Maygay prospered with the Monopoly machine, based on the Waddington's board game.