Net worth of former Tiphook group in red

DAVID HELLIER

Central Transport Rental Group, the trailer rental company formerly known as Tiphook, yesterday disclosed that its net worth had moved into the red since its April year-end.

The announcement, which came in a filing to the Securities and Exchange Commission in the US, helped trigger a 3p fall in the shares in London from 37p to 34p.

At its year-end the company said that its net worth - its fixed assets minus debts - had fallen to pounds 5.4m. A strengthening of the dollar (the currency in which the group carries most of its debts) against sterling is blamed for the subsequent deterioration.

The market is largely aware of the company's massive debt problems, but yesterday's announcement hardly helps sentiment as it prepares for a financial restructuring.

The company has already informed shareholders that next week it will be staging an extraordinary general meeting to approve the fact that its net worth is less than half its called-up share capital.

Ian Clubb, the former BOC finance director who took over from the extrovert high-spending Robert Montague as chairman, has said he hopes to have a financial restructuring in place by the end of the calendar year. Various options are believed to be under consideration, including a debt equity swap and some form of interest relief.

"The company is really in the land of the living dead," an analyst said. "It is hard to see how it can properly recover."

At the year-end the company's shareholders' funds amounted to pounds 10.8m, while net borrowings were almost at pounds 500m. In spite of these figures, the company says it continues to enjoy the support of its five principal lending banks.

Any financial restructuring, which is unlikely to excite the appetite of the larger UK investment institutions, will probably require the consent of the company's existing bankers, bond-holders and ordinary shareholders.

Between 70-80 per cent of the company's ordinary shares are held in the US. Most of the UK institutions deserted the stock months before financial problems forced it into selling its containers division, its most sought after business activity, to Transamerica of the US.

Mr Montague left Tiphook, the company he founded, at the end of last year after being made bankrupt over personal debts of more than pounds 30m. He was heavily criticised for receiving large remuneration packages even when the group was struggling with vast losses.

Recently the re-named company has been in court with Mr Montague in an attempt to prevent him from working for a competitor.