Bad day at the office as Regus plummets

IT WAS another difficult day at the office for former hot dog salesman Mark Dixon.

Alarm bells rang after one institutional shareholder dumped a block of 16.23m shares at just 1 1/2p. Rumours quickly swept dealing rooms that the company, now worth only £18m, is in dire financial difficulties.

Selling accelerated amid fears that the shares would be frozen by the London Stock Exchange until 63% shareholder Dixon can come up with a rescue plan - or, more importantly, some cash - to help meet its financial obligations over the coming months. Regus has a £240m annual global rent bill. Tenant income is at least 40% down from its peak.

Dixon's options are limited. At the current price, a rights issue is impossible. He could decide to take the group private and back the profitable centres. The sale or closure of its US operation, where it is losing more than £3m a month, could be on the cards. It has been especially hard-hit by weak demand in its US business, where millions of square feet of low-cost office space have been dumped on the market by tenants who can no longer fill it.

In June, Regus said it had considered placing its US business under protection of a Chapter 11 bankruptcy filing but it abandoned the plan after its landlords agreed to concessions on rent. In the three months ended June, Regus had bottom-line losses of £10.7m, compared with £7.6m last year. First six months' losses stretched to £22.4m.

The FTSE 100 retrieved an initial 34-point deficit which reflected Iraqi war uncertainties to trade 60.4 higher at best. The close was 36.3 points better at 4044.3 on mediocre turnover of 1.5bn shares.

Following US Treasury Secretary Paul O'Neill's comment that the US economy is on a bumpy road to recovery, and after a better-than-expected July rise in US business inventories, Wall Streetwas all over the shop in early trading.

Oil shares gushed in sympathy with the firm oil price. The price of Brent crude for November delivery closed at $28.86 a barrel ahead of Thursday's Opec meeting in Osaka and on expectations that Gulf War II will erupt shortly. BP rose 11p to 467p and Shell 11 1/2p to 412p.

As Swiss Life became the fourth major insurer to ask shareholders for cash (£400m) to shore up a balance sheet battered by the long bear market, the sector remained friendless. Royal & SunAlliance eased a fraction more to 111p. Chief executive Bob Mendelsohn's departure last week has paved the way for an £800m rights issue.

P&O Princess, the cruise giant, steamed a further 10p ahead to 454p on hopes that US authorities will today allow Royal Caribbean and Carnival to proceed with their bids.

After three block trades totalling 17.6m shares were cleared at 175p, property group Minerva rose 7 1/2p to 185 1/2p. Minerva holds 23.6% of department store Allders, 1 1/2p easier at 130p, and is its partner in the redevelopment of its flagship store in Croydon.

Veteran property entrepreneur Jack Petchey continues to stalk debt-laden hotels group Queens Moat Houses, 1/4p better at 13p. He has bought a further 8.42m at 13 1/4p via Trefick, his Isle of Man investment vehicle, and now holds 13.9%. In April, he offered to buy 26% of QMH at 14p-a-share, but other shareholders shunned him.

Petchey's presence on the share register increases the pressure on chief executive Andrew Coppel to do something about the group's borrowings. It has net debt of £639m and has to repay £229m of junior debt to its lenders by 2005. Coppel could sell its 24 properties in Germany to raise cash.

Advanced Power Components plummeted 9 1/2p to 27p after warning that full-year pretax profits will be well below market expectations. Revenues in June and July were well down, particularly in Asia where orders were reduced due to aggressive pricing from competitors.

On the other hand, Aim-listed Albermarle & Bond, the UK's only publicly-traded pawnbroker, jumped 7 1/2p to 67p on a 51% leap in annual pretax profits to £3.7m and bullish assessment of current-year prospects.