David Murray upbeat after coming back from brink

Published on Thursday 29 April 2010 23:11

HE CLATTERED down the Sunday Times' Rich List faster than an HBOS share when the hurricane struck.

But a resilient Sir David Murray showed no sign of defeat yesterday, lifting the curtain on what he admitted was "the worst year we've ever had".

Sir David, majority owner of Rangers Football Club and head of Scotland's biggest private company was, he says "brought to the brink" after a debt-fuelled property buying spree, which he has vowed never to repeat.

The group, which last year was staring into a bank debt abyss of 750 million, breached its banking covenants and has undergone a major restructuring. This has resulted in Lloyds Banking Group taking its shareholding in the business to 24 per cent in a 150m debt-for-equity swap.

This is the grim reality behind a massive 390m fall in his personal fortune in the past year, according to an annual list of the UK's wealthiest people.

In the Sunday Times' Rich List, his personal fortune was shown to have slumped from 500m to 110m. As a result, he tumbled 508 places in the list, from 88th to 596th.

But if Sir David was downcast, there was no sign of it whatever at his corporate headquarters in Edinburgh's prestigious Charlotte Square yesterday.

In his first-floor office, cluttered with trophies and awards and festooned with some of the most famous paintings by the Colourist Robert Peploe, he says the group's fortunes have turned sharply better in the period since end June last year. In the world of Murray International Holdings, retreat just seems a bad way to spell advance.

Accounts for Murray International Holdings spanning steel fabrication, property development, financial investments, call centres and outsourcing, reveal a ferocious 154.5m writedown in the value of properties and a post tax loss of 174m.

Murray Capital, the investment arm run by his son, has been demerged from the group and taken over by the Murray family. And talks continue on the sale of Rangers – the smallest part of the empire, but the one that generates by far the greatest amount of publicity.

The group figures for the 18-month period are bathed in deepest red. The carrying value of the group's development and investment properties was written down by 154.5m, representing roughly 20 per cent of the 750m book value.

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

Since the year-end date, "a fair proportion" of the downward revaluation has been reversed, the group has sold a 175,000sqft office development in Glasgow for 66.5m, generating a profit on disposal of 12.5m, and the price of steel has rebounded strongly.

Despite the severe downturn in the group's fortunes, MIH still employs some 3,500 people at home and abroad.

So, far from being downbeat, Sir David is confident that both MIH – and Rangers FC – will show an operating profit this year.

"There were factors outwith my control. But I have to take responsibility for taking on property loans and buying so much metal at the worst time," he said yesterday.

"We all borrowed too much money. We got it wrong. And we have paid the price for it. But much of the fall in property values has recovered."

Despite the searing experience of being caught with huge debts as the commercial property market experienced its biggest slump in living memory, he praised Lloyds for its support "as banker, joint venture partner and shareholder.

"Throughout the restructuring, the approach of both parties has been one of mutual co-operation and pragmatism."

Lloyds' equity stake will entitle it to a seat on the MIH board. But Sir David laughed off suggestions that the Rangers team strip next season would be emblazoned by a black horse on a green background.

The word "never" seemed to shake the Peploe canvases more than any call from the group's bankers.