Forth Ports bids pounds 131m for Tilbury

RUSSELL HOTTEN

Directors at London's Port of Tilbury will become millionaires overnight and hundreds of dock workers will make thousands of pounds after Forth Ports yesterday announced a takeover worth pounds 131m.

Three directors will pocket at least pounds 5m each, while 1,500 employees and their families will receive an average of pounds 23,500 for their shares, issued free as part of a management buyout in 1992.

Three other Tilbury directors will make at least pounds 3.6m, while several hundred staff will also receive another pounds 51,000 by cashing in preference shares bought at the time of the port's privatisation.

The management paid pounds 32m for the trust port, and yesterday's valuation is likely to raise concerns that the Government grossly underpriced Tilbury. Last year executives at Medway Ports received multi-million-pound windfalls, and employees thousands of pounds, when Mersey Docks and Harbour Company bought the operation.

At privatisation, Tilbury's employees received 291 free shares worth pounds 1 each, while more than half the staff also bought into a special mixture of ordinary and preference shares.

Forth's offer values each Tilbury share at pounds 81.10, which means Schroder, one of the MBO's backers, will make a substantial gain on its 1.7-million shareholding.

The three directors making pounds 5m are Alan Ravenscroft, chairman; John McNab, chief executive; and Sid Beecham, finance director. They have all been at the company since leaving school, working their way up from the "shop floor".

Forth Ports is raising pounds 70.5m through a one-for-two rights issue at 490p a share to help fund the purchase of Tilbury's owner, International Transport Limited. Forth's shares closed up 35p at 625p. The company will pay pounds 121m cash, and repay pounds 10m in ITL loans.

Tilbury is the largest multi-purpose port facility in terms of volume on the River Thames, with eight kilometres of quays and 325 hectares of land.

ITL saw operating profits rise from pounds 2.2m in 1992 to pounds 8.7m last year, on turnover of pounds 40.2m. Cargo throughput in 1994 was 6.9 million tonnes.

Forth said the purchase was an opportunity to expand its business into the South-east of England and provide a better group balance between tonnages of piped and dry cargo.

"It provides us with a significant presence in the South-east, close to the main European shipping lanes and the UK's principal concentration of population," William Thomson, Forth chairman, said.

The MBO was one of only two serious bids in 1992, which the company said indicated that it was not regarded as a big money-spinning operation. "The director and employees were putting their own money at risk," an ITL spokesman said. In the past three years IT has invested about pounds 40m in new facilities at Tilbury.

Forth said it expected the acquisition to be earnings-enhancing in the first full financial year before the benefit of pounds 45m in tax losses accrued by IT.