Skinflint's
City Diary
Rowland for Lonrho
kmrho is once more in a mess. It IS not difficult to chose between
he self-made director Tiny Row
land, owning a fifth of the business and ready to put up more
Cash, and a very expensive manager, however professional he Considers himself, like Sir Basil Srnallpeice.
Over Easter I talked to two .sPrY, well-informed shareholders their eighties who reluctantly necame shareholders when their family holding in Anglo-Ceylon and general estates was taken Over as a result of 117 Old Broadstreet putting them in control on, the market. Both were outspoken In their loyalty to Tiny Rowland, Who will have little difficulty in thrashing his opponents. Sir Basil end his colleagues, disliked heart by some small shareholders, inSt, as as professional managers nave the habit of doing, on very big compensation. Whether these demands should be paid must be left to the lawyers but Tiny Rowland, once he has won, should learn from successful groups and get down to as small a main board as possible — preferably no more than five loyal fulltime colleagues who will need to be given big shareholdings in loan accounts.
SPinning off
Lonrho is in trouble in spite of he £23 million profit it is said to be earning this year. Much of this Profit is blocked and cannot be rePatriated for dividend payments. 1310cked assets secure British °tank borrowings and for Row'end's team to, as it were, try harder will increase the troubles.
The Chairman Says...
No. 18: Sir John Clark
Chairman of the Plessey Company. His strategy should be directed to turning Lonrho into a financial trust selling and spinning off profitable subsidiaries. In certain cases control of small UK public companies should be acquired and overseas earnings injected into them for shares which must be quietly placed on the market. It will be a long tedious market. It will be a long tedious job. Rowland should forget his Mystere Jet and spend time putting pressure on his accountants to get individual subsidiary company profit figures and projections ready. He should build up an inner team of three or four young company lawyers and accountants to act as his spin-off team capable of completing transactions right up to the final press release at a single session. They should not be new lawyers and accountants but be headhunted from within some conglomerate. Customers are at hand — Malcolm Horsman of Ralli is interested in some of his business and Oliver Jessel of Jessel Securities in others. There are many more. He needs a dedicated firm of stockbrokers with a room full of telephone salesmen singing the praises of each new Lonrho deal as it is announced and placing the huge number of new shares as they are created. This, is the plan Rowlands must adopt albeit without making public admission. If a £23 million profit figure for 1973 has done nothing for the Lonrho share price it is unlikely that news of the well intentioned but bewildered Sir Basil and his friends being given the sack by Lonrho shareholders will help, though it will be a start.
When to buy
Keep well clear of the shares which will only be a buy when Rowland is firmly in control, starts appearing in the media, and adopts the banker's strategy or turning everything he can into cash. And why not, when the Treasury says you should get 10 per cent for your money — though for the life of me nobody's been able to explain why.
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