CITY AND SUBURBAN
A bloated head office, a dead weight of debt it's time to buy Tuscany out
CHRISTOPHER FILDES
Iwas delighted to find, when in Tuscany the other day, that a movement is afoot to restore the Grand Duchy. `Granducato' stickers can be seen on the better class of Alfa Romeo. Tuscany's great mistake was to join Italy. It seemed a good idea at the time of the Risorgimento, and Florence was briefly the new kingdom's capital. Rome then took over, and things went downhill. All these 19th-century mergers and takeovers have left Italy resembling an old-fashioned holding company, imperfect- ly administered from a bloated head office which has lost control of the finances. While the directors make the best use they can of their expense accounts and patron- age, the company is hard pressed to borrow enough to keep up the interest on its previ- ous debts. In the world of business, such a group would go into receivership, thus tak- ing head office and its dead weight of debt off the backs of the operating companies, such as Tuscany. Or it might seek to refi- nance itself by selling off its desirable sub- sidiaries, such as Tuscany. Or they might be the subjects of management buy-outs. Even Sicily might make head office an offer it could not refuse. The Lombard League, from its historic financial power-base, prefers to advocate a demerger on the lines developed by Imperial Chemical Industries. It favours splitting the country in half. The advanced and dynamic north would com- mand a high rating, which would in theory make it possible to refinance the whole group and let the south float off. At head office, the preferred approach to refinanc- ing is on British lines — serial privatisation. I know just where I would start. Viva il granducato, e dica a Sid.
Two men on a bus
TWO long-serving directors of Italia s.p.a. got their collars felt this week. Guilio Andreotti, the recurrent prime minister, and Gianni De Michelis, the flamboyant foreign minister, were both put on notice that they are under investigation. This is about allegations of corruption, and is dis- tinct from the investigation into the former prime minister's alleged links with the Mafia. It will set off some unworthy gig- gling, not only in the Thatcher household but even, I dare say, in the Foreign Office. When it was Italy's turn to preside in the European Community, this two-man team was in charge. They were said to have been vexed by reports that the British had com- pared the experience to being in a bus driv- en by the Marx Brothers. In return, they sprang an unwelcome surprise on British diplomacy. Suddenly, at the summit meet- ing in Rome, they changed their bus's desti- nation sign to MONETARY UNION EXPRESS and drove off, leaving Mrs Thatcher furious and solitary on the pave- ment. She came home swinging her hand- bag with such reflexive force as to catch Sir Geoffrey Howe behind the ear, and thus provoked his resignation, which brought about her downfall. Now she might well ask whether we should ever have wanted to board a bus with these two as driver and conductor. A different question is one that I posed to a friend in the Bank of England: 'Why should Italy, of all countries, lead the rush towards union?' Put it this way,' he told me, 'if you worked in the Banca d'Italia or the finance ministry for Italian politicians, you'd want to work for someone else.' I can help.
Light at the end
THE other day Sir Alastair Morton got off a train at Folkestone station, having got on it in France. There is light at the end of his tunnel. In six weeks' time the builders move out and the commissioning starts. How soon the passengers move in depends on Sir Alastair's poker game with the contrac- tors. They are painfully out of pocket, and they hope to retrieve some of their fortunes by charging him more to let the service start on time. That affects his other poker game, played for higher stakes, with the bankers to whom Eurotunnel now owes £7 billion. The sooner the cash starts to flow, the sooner he can start tunnelling into his debt mountain, and the closer comes the day when he can stop paying interest and start paying dividends. After that, share- holders have a clear run to the end of the concession in 2042. The shares quivered last week on talk of a call for new capital — which will surely come, once Sir Alastair can show that his project is working — but look steady enough now. That is instructive, because the best guide to Eurotunnel's progress and prospects has always come not from the warring publicists or learned ana- lysts but from the share price. Most of the equity now belongs to the French, who have never been hung up on Anglo-Saxon obsessions about insider trading, but like, for their money, to know what is going on.
The bankers' opera
I ONCE had the nerve to ask Deryk Van- der Weyer, the great Barclays banker, to ginger up the D'Oyly Carte Opera Compa- ny. Barclays was then backing it, I had just endured its perfunctory plod through The Mikado, and I thought that a word from its sponsor might do good. I was rebuked: 'Christopher, does it occur to you that it's difficult enough to run a bloody bank, with- out trying to run a comic opera too?' The bankers (Barclays included) who lent to Robert Maxwell must now know the feel- ing. They have in advertently landed them- selves with a controlling interest in Mirror Group Newspapers — as an opera, less comic than soap, but full of incident and burdened with a message. That is the worst of it. They find themselves urged to pre- serve the Mirror papers in their quasi-con- stitutional role as Labour's voice in Fleet Street, protector of chums and provider of lunches — to be worthy successors, in fact, of Cap'n Bob. It is beyond the call of bank- ing, but the only way out is to get the shares sold. The clear-out in this week's MGN fig- ures, and the shares' strong response, sug- gest to me that the banks are in a hurry.
Non-starter
MY RACING correspondent, Captain Threadneedle, writes: It is many years since, in these columns, I likened the grandstand at Aintree to a derelict Cunarder slowly sinking in an overgrown goods yard. In those days the course was under an idiosyncratic form of one-woman management, and I never thought that I should feel nostalgic for her. Come back, Mrs Topham, almost all is forgiven.
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