Tiphook warning has shares on slide

ROBERT MONTAGUE, chairman and chief executive of Tiphook, came under increasing pressure yesterday as the troubled transport group's share price tumbled further, writes John Murray.

The shares, which opened at 169p, plunged to 116p after overnight selling of the company's American Depositary Receipts in New York, but recovered slightly to close at 123p. They fell from 239p on Thursday after its third profits warning this year.

Tiphook has relied on US interest to bounce the price back up after the two previous warnings. About 50 per cent of the group's equity is in the hands of American investors through the ADR programme.

The company is now in talks with its bankers as losses in the first half will see it break its covenants, with its pounds 1bn-plus debts rising above five times shareholders' funds.

City observers said lenders and investors were likely to exact a heavy price for continued support. ' Mr Montague must be in a very vulnerable position,' one analyst said. He said either a rights issue or a debt-for-equity swap seemed probable in an attempt to shore up Tiphook's balance sheet.

'It is difficult to see how the company can trade out of these levels of debt with a bust share price and with the continuing capital expenditure commitments it has got,' he said.