12 JUNE 1971, Page 27

Chemical reaction

Dr Frankel has the misfortune of inheriting Staveley Industries Limited which are in a sorry mess, who had before as Chairman Mr Aubrey Jones the conservative politician and later Mr Denis de Haviland the import- ant civil servant. I have no factious ani- mosity to the company but they owe a lot of money and are not making much profit. The chemical and mineral side is doing well, but the engineering activities bought with com- pensation money at the time of the national- isation of coal (later more were bought by

Mr Denis de Haviland as acquisitions), are all in a plight. Sometimes late in the night I

get a cold shiver when I remember that I once had shares in a company Staveley's thought of buying with their shares then at 48s and they are now about 9s (45p).

Dr Frankel please let me give you some advice. Cut back on engineering as you are doing but it is more important to concen- trate on your chemical developments. Con- centration means cutting your overheads and getting in a firm of auditors, early in the year so that you are ready to float these developments in say the sixth month of its trading which will mean that you will be able to give a fulfillable forecast for the year. You will need a merchant bank with a good name and more important a lot of money to help, since you will have debenture holders and the bank to placate whilst the operation is being performed. You will finish up with a loss making engineering company with strong assets in the form of trading in- vestments in chemicals. This subsidiary will be controlled by you and with a good price earnings ratio and it's shares well rated so

you will he in a position to carry out inter- esting takeovers and mergers. You will have plenty of time to sort out and sell off the remains of the companies like Asquith, Craven and Swift, Kearns. and Kendall and Gent, that the former mandarin Dr Denis de Haviland (now retired for health reasons abroad) bought and with which you are still landed.