Power agreement on restructuring may restore share quote

POWER Corporation, the debt-ridden property company with borrowings of £190 million, has finalised a restructuring which should lead to a restoration of its share quotation, according to reliable sources. A statement is expected shortly.

Agreement on the restructuring has been signed by the new investors, the banks and the company. It will have to be approved by the shareholders.

The restructuring involves an injection of around £20 million by the investors, and the unsecured creditor banks, who are owed around £100 million, have agreed to a writedown of some 50 per cent. In return for the writedown these banks will be able to convert the amount written off into new Power shares.

The new investors are British property developers and institutions. They will end up controlling the revamped group. The syndicate of 12 banks is led by Irish Intercontinental but around £90 million of the bank debt is secured against individual properties, and this does not form part of the restructuring.

Power has been trying to secure an extensive capital restructuring for almost two years. Early last year, a restructuring involving a

£50 million investment by the Malaysian company Insas Berhad and the raising a further £50 million through an open share offer and placing, collapsed.

When the initial restructuring was proposed in June 1994, Power's shares were trading at 53/4p. However, when the shares fell to 2p, the deal fell apart.

The shares were suspended at l 1/2p per share last October pending the outcome of the restructuring with new investors. The suspension I was sought by the Power directors, because the company was unable to release its annual report and accounts for the year to March 31st, 1995, by September 30th as required by the Stock Exchange rules.

These accounts are now expected to be published before the end of next month. The last published accounts were for the six months to end of September 1994. They showed a pre-tax loss of £5.6 million and a loss per share of 4.85p. The net tangible assets stood at £9.2 million.

Since these accounts were announced the book value of the group's properties has been substantially reduced. This will have resulted in the shareholders' funds going into a deficit, indicating the urgency for a restructuring will probably result in a gearing of around 100 per cent. But the injection by the new investors will reduce that figure, possibly to around 70 per cent, but the exact position will not be known until the group produces a pro-forma balance sheet next month. -

-Power owns properties in Ireland, Britain and the US. Mr Robin Power, the founder, and his wife, Ms Michele Kavanagh, resigned from the company last April. He owns I 3 per cent of the group, valued at £232,000 at the pre-suspension price. This holding was valued at £33 million six years ago when the group was at its peak.