DOUBTS about the future of the troubled Power Corporation have intensified following the cancellation of its share listing on the Stock Exchange. The removal of the share quotation follows the failure of the heavily indebted company to negotiate a rescue deal.
Power has been in quasi receivership for some time, and has only remained in operation because the banks to which it owes about £100 million have allowed it to operate in the hope that it can bring in an investor and restructure its finances. The banks are not receiving interest payment on their loans.
After the collapse of two restructuring deals in less than two years, Power directors are now discussing the future of the company with its creditor banks. The company owes about £100 million to 12 banks. Additional loans of £90 million are secured against individual properties mainly in the US.
While some of the creditor banks said yesterday that they will continue to work with the company to try to find a solution, they said the options have now narrowed and a restructuring has become more difficult.
Most of the creditor banks are still reluctant to put the company into receivership while there is any chance that an investor might be found. But one banker warned yesterday that the situation "cannot go on for ever".
The cancellation of Power's share listing yesterday has reduced the rescue options. It means that the company will no longer be attractive to a rescuer looking to buy a stock market listing.
While a number of potential investors have expressed interest in the company or some of its remaining properties, it is understood that no discussions are currently under way with investors.
Power would only say yesterday that discussions are continuing with its creditor banks.
Power shares which reached a high of 215p in 1990 were suspended at 1 1/2p in October 1995 when the company was unable to produce its financial results for the year to end March 1995.
Under Stock Exchange rules the company could have been delisted last March but was given an extension by the Stock Exchange to facilitate restructuring negotiations with a group of British investors led by Mr John Beckwith.
With the collapse of these negotiations in July and the apparent failure to find an alternative investors, delisting became inevitable. Mr Beckwith, the chairman of the Premier Club, the fund raising arm of the Conservative Party, and other investors pulled out of a deal involving an equity investment of about £20 million.
Under this deal the investors would have taken control of a revamped Power and the syndicate of 12 banks led by Irish Intercontinental Bank planned to write down their loans by about 50 per cent in return for equity in the revamped company. The collapse of this deal followed the failure in 1995 to agree a restructuring involving a £50 million investment by the Malaysian company Insas Berhad.
Power's room for manoeuvre is now very limited. The company has not produced accounts for two years. Its last published accounts were for the six months to end September 1994. These accounts showed a pre tax loss of £5.6 million, a loss per share 4.85p and net tangible assets of £9.2 million. However, since then the book value of its properties has been sharply reduced, resulting in a deficit in shareholders' funds.
Power owns about a dozen properties in Ireland, the US and Britain.
