Murray in £150m deal as Lloyds increases MIH stake

Published on Thursday 29 April 2010 21:05

LLOYDS Banking Group is increasing its stake in Sir David Murray's group of companies in a £150 million debt for equity swap.

• Sir David Murray: Difficult to avoid trouble in poor market. Picture: SNS

The deal will see Lloyds raise its holding in Murray International Holdings from 12 to 24 per cent and will reduce the company's debt – which last year stood at 759m – by a similar sum. The bank is expected to take a seat on the MIH board.

Murray revealed the deal yesterday in an interview with The Scotsman when he spoke of his "worst year ever" and how he expected the company to return to profit this year.

Delayed accounts for the 18 months to 30 June last year show an operating loss before exceptionals for the period of 8.5m against an operating profit before exceptionals of 42m in the previous year. Turnover rose from 426.3m to 648.2m, even after taking into account the change in accounting date.

Murray said market conditions had made it difficult to stay out of trouble. "It would not have mattered how good I had been or how good I thought I was, there were factors out of my control," he said.

There had been a collapse in metal prices forcing the metals division to move from profit to loss "almost overnight".

A collapse in property values led to a 154.5m writedown on the portfolio. This has been taken as a one-off hit on the accounts and contributed to an overall loss after tax of 174.8m against a 5.1m profit last time.

Even as prices fell, some properties were sold at a profit, and he said values may be revised upwards this year. But the portfolio would be scaled down.

As a result of the downturn in the company's activities, it breached its banking covenants leading to the financial restructuring, which will strengthen the group's balance sheet and repair the impact of the property writedowns.

Murray Capital, the private investment division, is being demerged from the group but will be wholly owned by the Murray family and run by David Murray junior.

Murray revealed that he was hopeful of selling Rangers Football Club, which is 92 per cent owned by the Murray group, by the start of the new season, though nothing was guaranteed. The likely buyer is Andrew Ellis, a 41-year-old London-based property tycoon.

Rangers recorded an operating loss of 11.74m for the year to June 2009, not helped by early exit from the European Champions League.

Its operations will not be affected by the financial restructuring of the group and its debt facilities will remain separate from the group. Murray said he expected its 31.1m debt in the last set of accounts to be lower and the club to report a small profit this year.

"A buyer will pay a figure to buy a debt-free club," he said.

Referring to the group's prospects, he said: "I consider that, although the UK's economic recovery remains fragile, the worst is behind us."