200m pounds Camco sale below Pearson hopes: Sharp drop in oil price is blamed
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Your support makes all the difference.PEARSON'S sale of Camco, its US subsidiary, raised about pounds 200m for the media conglomerate yesterday. The figure was well below Pearson's expectations a month ago.
In November, the group said it expected to achieve between dollars 17 and dollars 19 a share for the oil services company, but in the event the sale raised only dollars 15 a share.
Pearson has sold 55 per cent of Camco (13.5 million shares) through a public offering in New York completed yesterday. The sale generated about pounds 130m net of expenses, in addition to which Camco is being sold with debt worth about pounds 70m.
Pearson has said it will keep its remaining holding 'for a limited period'. Under US Securities and Exchange Commission regulations, Pearson cannot dispose of more shares for 180 days, although the underwriters to the sale have a 30- day option covering a further 8 per cent of Camco.
Pearson blamed the shortfall in the sale proceeds on the precipitate drop in the oil price, which has fallen by almost dollars 2 a barrel to about dollars 13.65 over the past month.
But a spokesman said postponing the sale would have been to risk the oil price falling further.
Analysts said Pearson had in any case probably over-estimated the attractiveness of the company, which made losses in the second half of last year and is likely to generate profits of only about pounds 20m this year. Camco's net assets were pounds 132m at 30 September.
After writing back goodwill, Pearson will report a non-operating loss on the deal in its full-year results. But along with this month's demerger of the fine china group Royal Doulton, the Camco sale is a key element in Pearson's strategy of concentrating on media and banking.
It is continuing to seek a television acquisition following its recent failure to win Star TV, the Far Eastern broadcaster. And the company, capitalised at pounds 3.2bn, is well placed to make a large purchase.
Cross-media ownership restrictions make a UK television acquisition difficult, although the Department of National Heritage is understood to be working on plans to liberalise this area which it hopes to bring forward early in 1994.
Pearson's shares closed up 8p at 589p.
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