Whitbread shares soar on windfall hopes

WHITBREAD shares soared on the prospect of a possible £800m cash windfall for investors.

Analysts say that the struggling hotelier, restaurateur and health club operator can afford to borrow much more than it currently does, and finance director Chris Rogers has pledged to re-examine the company's capital structure.

Experts say chief executive Alan Parker should gear up the balance sheet, or risk being taken out by a cash-rich private equity buyer.

Merrill Lynch estimates Whitbread has enough financial headroom to fund an £800m, 310p-a-share special dividend and still be one of the most conservatively-financed firms in the leisure sector.

It has already returned around £400m following the sale of its Marriott hotel chain. The broker's bullish assessment pushed shares up from 918½p to 945½p. A second special dividend would go some way to offsetting disappointing trading.