SKINFLINT'S CITY DIARY
Richard King and Colin Forsyth, gay blades and snappy dressers both, have received the warm blessing of Sir Kenneth Keith's Hill Samuel bank on the back-toback sale of their Pan Australian unit trust management companies to the Industrial holding company, London and Bombay.
The Sunday Express says the deal must be stopped as Pan Australian is number 232 in the unit trust charts — at the bottom. King and Forsyth are also directors of London and Bombay. The bid price works out at 7.7 per cent of the £18.3 million of funds managed — and these are falling through redemption. Southern Cross, the main management company, which had its 1968 and 1969 accounts queried by the auditors, is being sold at £697,500 for net assets of £27,000 which will be wiped out if this year's loss of £31,000 continues; Manx sold for £637,125; another important trust management company, PAIM, for £40,000 (having assets of £12,636 of which £7,966 is an investment in the partners' Rolls-Royce); and Southern Cross Management (Hong Kong) Ltd., for £35,000. This last was founded in June and as not prepared accounts, but is presumably worth its paid up capital of £200.
It is interesting to conjecture why the directors, particularly Sir Kenneth Keith's Mr R. P. Kirwan Taylor, who is also a director of Hill Samuel, with 57,400 shares and a trustee for 116,011 further shares of London and Bombay should be recommending this deal since there is faint possibility of a contribution to profits in the near future and no forecast. Do they intend to use the unit holders' funds for 'warehousing,' which, as the City world knows, is the 'using of fiduciary funds to purchase strategic holdings in companies which are subsequently bid for by the parent conglomerate? Quite legal in this country, of course, but why should London and Bombay's capital be watered through acquiring the management companies, since as private companies they could conduct 'warehousing' for London and Bombay, if this is what Sir George Bolton, seventy-one-year old retired banker and his board, envisage?
The excellent M & G Group and other well thought of top unit trust groups turn their faces resolutely against ' warehous ing ' as dangerously inimical to small unit holders interests. The extraordinary general meeting convened for Decembe 17 to approve the transaction may be lightly attended, and will rubber-stamp Hill Samuel's scheme. Permission to deal will be granted by the Council of the Stock Exchange without fussy formality, though a list must be pub,ished of the pension fund, institutional, and other large shareholders like, no doubt, George Ross-Goobey of the Imperial Tobacco Pension Fund, the man from the Prudential, Eagle Star and other city leadem, who are in a position to get together tcori/otO .against , the present deal.
King and Forsyth should then have time to get Southern Cross and their other companies into better condition and into some reasonable growth area.
Orme—Drury cont.
In this column on Novernher 10, I recommended a subscription td, the Orme Developments issue at 70p 'With a• sniff. They went to 140p and now there is to be an inquiry by the Stock Exchange. We all, know ,fabout the City where a man's is his 'bond and a deal worth million is, settled with a nod and Sir Kenneth Neith says there is no need for a Securit,,and Exchange Commission. The inquiry shouldn't bother with the dealings of the, promoters, Whitfield and Tanner (who did not need to go near the market), but ask why news of the vital Drury shareholding was not revealed at the time of the Orme' offer for sale. Did Whitfield or Tanner or Sandelson and Co, or anyone else close to the issue have any correspondence or discussion with the Drury shareholders before the Orme issue? We are only certain that Orme had 30 per cent of Drury seven days later.
No one who has made a profit need concern himself since the Stock Exchange inquiry is only of academic interest and to satisfy the vulgar curiosity of the small man, since, as we all know, the Stock Exchange does not want or have real power of investigation or sanction and the matter will be quickly forgotten.
Ralli—CTS cont.
In this column last week I said sell Consolidated Tin Smelters at 260p or so. Now that the Ralli International bid has been seen to be a feint, Consolidated Tin Smelters have come back to 195p.
Jimmy Goldsmith of Cavenham Foods, known to both Malcolm Horsman of Ralli and Jim Slater of Slater Walker, was married to Antenor Patino's late daughter, and Bobby Buxton, late of J. H. yartsseur, is married to Didi, ex,wi‘p.,,of,,,young George Patino. There are thus those around who may have guessed the Patino family's reaction to a bid, however much some senior CTS employees yearned to get away from thraldom to Paris. As I was once Consolidated Tin's ore buying assistant in Ipoh and was, in fact, for a time in sole charge of the staff (one Chinese clerk) in their Pusing office I an able to say there was never a possibility of the Patinos relaxing their close grip.
There is a handy profit for Ralli, and a lot of other people besides those who took my advice. I don't suppose we shall hear how much Ralli made as there is no obligation, so far as I know, for associate share sales to be revealed after a bid has been withdrawn.
Allied—THF
My money is on Sir Charles Forte, "greasy Charles," as he is affectionately known in the City, to win both rounds in the Allied/THF fight: the first, against professional managers Lord Crowther and Michael Pickard, who must go if he cannot work with them; and round two against Allied Breweries and their advisers Rothschilds. Sir Charlies, with 25 per cent of THF, is far and away the best man to run THF and his shares are worth retention. They may fall a little when the Allied bid fails and Rothschilds unload the shares they have been buying, but stick with them.
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