07.05.10

By Jennifer Rigby

Debt-for-equity swap eases pain after torrid 2009

Sir David Murray’s property and metals group, Murray International Holdings, has been refinanced.

Its lender, Lloyds Banking Group, has injected £150m into the group in a debt-for-equity swap, which has increased the bank’s stake from 11% to 24%. It has also reduced Murray International Holdings’ £759m of debt after the global downturn caused the group to break its banking covenants and slip into the red.

In the group’s delayed accounts, filed at Companies House last week, Murray said the downturn had hit hard its two main businesses, commercial and residential property and metals.

Over the 17 months to 30 June last year, Murray International, which owns property subsidiary Premier Property Group, made a pretax loss of £174.8m compared with a £5.1m profit the year before. The loss included a £154.5m writedown of its investment and development portfolio.

The group said: “This writedown represented roughly 20% of the £750m book value of our estate.

“While this reflects a marked deterioration in values, it is not as significant as many in the property sector have suffered due to the quality of our portfolio and a conservative approach to valuation historically.”

However, the signs of recovery in the property market after last year’s collapse in values have provided Murray International with some grounds for optimism.

In December, it sold 141 Bothwell Street in Glasgow for £66.5m, and made a profit of £12.5m.

As well as the debt-for-equity swap, Murray International has completed a restructuring in a bid to improve transparency. This has involved segregating some of its portfolio of businesses and scrapping cross-guarantees across its metals, oil, gas and outsourcing divisions.

Murray is also expected to sell his controlling stake in Glasgow Rangers Football Club, which made an operating loss of £11.9m for the year to June 2009.

However, he remained positive about the future in the accounts, whose publication should mark the end of a turbulent period for his empire, in which his personal wealth was also hit.

In this year’s Sunday Times Rich List he plummeted 508 places to 596th, after losing an estimated £390m. His fortune now stands at £110m.

In the accounts, he said: “I consider that, although the UK’s economic recovery remains fragile, the worst is behind us.”

Premier Property Group director Andrew Glasgow added: “2009 was a year of retrenching, reviewing and restructuring for PPG.

“This year sees us back on track and doing what we do best — developing and managing property.”

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Source: Property Week (www.propertyweek.co.uk)