Woodchester likely to announce that company will be put on the market

Woodchester Ivestments is expected to use the announcement of its 1996 results on March 13th as an opportunity to clarify the position on the future ownership of the financial services group.

After a period of intense speculation on whether its troubled French shareholder Credit Lyonnais will sell its 54 per cent shareholding, the board of Woodchester is expected to inform shareholders that the company is to be put on the market.

The Woodchester board which includes six representatives of the French shareholder is likely to tell shareholders that advisers have been appointed to find a buyer for the company. The advisers will invite offers from suitable purchasers in a process that is expected to take about three months.

Some potential purchasers, including the acquisitive US leasing giant GE Capital, have already approached Credit Lyonnais and Woodchester over the past twelve months. GE Capital is seen as a front runner to acquire Woodchester while other potential buyers include some UK-based financial services companies interested in its UK leasing book.

Ulster Bank, which owns the growing Lombard and Ulster leasing operation and is itself owned by the British-based National Westminister Bank, has not ruled out an interest. In the Irish market Irish Permanent has ruled itself out. AIB and Bank of Ireland would probably have problems with the Competition Authority because of a takeover would give them too much of the market. ABN AMRO is not interested.

It is likely that potential buyers will be invited to bid for the entire company and not just for the Credit Lyonnais stake. At yesterday's closing price of 273 1/2p Woodchester has a current market value of £580 million. But a buyer is likely to have to pay a premium to acquire the operation.

A buyer of the Credit Lyonnais stake would be required under Stock Exchange rules to make a similar offer to the remaining shareholders. But such a buyer could seek "a whitewash" or dispensation from Stock Exchange requirements if the other shareholders agreed. Credit Lyonnais got a whitewash when it raised its stake in Woodchester above the 50 per cent level.

With profits for 1996 likely to be ahead of the £44 million to £45 million forecast, potential buyers will have to pay a premium on the current share price. Woodchester shares jumped 8 1/2p to close at 273 1/2p in a strong market yesterday as speculation continued about Credit Lyonnais intentions. The shares have risen from 218p at the start of the year, an increase of 25 per cent.

While the sale of Woodchester reflects the pressure on Credit Lyonnais to divest of its assets outside France, it sees the Irish company as a strong performer and a valuable asset. It will seek the best possible price for its stake.

Woodchester sources refused to comment yesterday, stating that no comment was possible because the company was in a closed period in advance of publication of its 1996 results.

At 273 1/2p Woodchester shares are trading at over 2.7 times the group's forecast end 1996 net asset value of 98p to 99p. The price has been pushed up by bid speculation but, while market sources say the price is discounting a bid, they said there may be room for some further premium.

Woodchester has been on a steady growth path since 1994 after a major restructuring and reorganisation. One of the advantages to a buyer would the tax breaks associated with Woodchester's new administration centre.

Woodchester's chairman, Mr Craig McKinney, would be a beneficiary of any sale. At the end of 1995 he owned 2.56 million shares which are now worth £7 million. In addition, he had options over an additional 759,986 shares at an average option price of 157.74p.