Greycoat rescuers plan pounds 86m injection: Move to placate preference shareholders

BRIAN MYERSON and Julian Treger, the South Africans behind the UK Active Value Fund, yesterday spelt out their long-awaited plan for the rescue of Greycoat in a deal that involves the injection of pounds 86m cash into the group.

The restructuring comes four weeks after holders of Greycoat's preference shares and zero coupon bonds voted down a rescue package proposed by Postel, Britain's largest pension fund.

Mr Myerson and Mr Treger hope to have quelled the rebellion from the preference shareholders by offering tham a smaller cut in their nominal value - down from 100p to 60p, against 40p under the previous plan - a 15 per cent increase in income and the chance to convert their holdings to ordinary shares.

If all take up the offer at the earliest opportunity, they could end with about 20 per cent of the company.

Most of the pounds 86m will come from a five-for-one rights issue at 12.5p a share, and the Active Value Fund will subscribe for 30 million shares at 20p. The rights are underwritten by Samuel Montagu with sub- underwriters including the Active Value Fund. If no shareholders take up their rights, the fund could finish with 47 per cent of the company.

Mr Myerson said he believed the proposal was 'fair to all classes of shareholder and bondholder'. His fund may seek board representation.

Alistair Ross Goobey, chief executive of Postel - which still has a 5 per cent stake - said he supported the plan but added: 'The terms are clearly not as favourable to ordinary shareholders as ours were.'

The ordinary shares closed 1.5p higher at 25.5p while the preference shares rose 3.5p to 62p.

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