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I{ilmartin in crisis ta I(s with banl(

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• Scottish property companyin negotiations with BanI< of Scotland

BY JENNIFER RIGBY

scomSH PROPERTY GROUP KILMARTIN, WHICH has had its net asset value wiped out by the property crash, is in crisis talks with lender and 50%-owner Bank of Scotland Corporate.

Property Week has learnt that Kilmartin Holdings, once one of Scotland's largest property companies, had a net deficit of £16.4m at 30 April 2008, which meant it owed £16.4m more than it owned.

In its 2008 annual consolidated results, which were only signed off on 29 May, the auditor Chiene & Tait said it could not comment on whether the company could continue as a going concern because of a lack of evidence.

Chiene & Tait said: 'While the directors consider that bank facilities will be available and sufficient to enable the company to meet its obligations as they fall due for payment, the company has not yet agreed its funding facility with its bankers for a period of at

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lain Wotherspoon, chairman ofl<ilmartin, said: 'We are still in negotiations with the bank. We are assessing our portfolio, work-out strategy and funding facility.'

The 2008 results, which showed that Kilmartin made a pretax loss of £46. 7m to 30 April 2008, also indicated that the company had £288. 7m of liabilities that were due to be paid within one year and an overdraft that was up for renewal in mid- 2009.

Wotherspoon said: 'We are in the process offixing this. We are in discussions with the bank on various options.'

Wotherspoon said Kilmartin was also making progress on property transactions: 'We are continuing to lease vacant space and have let deals worth £2.3m a yearin rent since January. We have £41. 5m under offer for sale. We are making good progress in difficult marl<et conditions. We have cut our overheads and closed offices.

'Our reputation is built on worl< out. That's what we are good at. Given time, we can rectify this.' '

I<ilmartin's Scottish rival, I<enmore, is also financed by Bank of Scotland Corporate and arranged a restructuring with the ba nl< last year.

Another Banl< of Scotland Corporate-backed company has also revealed the full extent of its woes.

David Ross's I<andahar Group last week posted its company accounts for 2007, which showed the company had made a loss of £94.8m.

Bank of Scotland is thought to be committed to supporting the company as it renegotiates its £247m loan, but it is expected to breach its loan-to-value covenant in July.

I<andahar Group created a £500m joint venture with Morgan Stanley's MSREF V International fund in 2006. But last week Ross's l<andaharTrust bought out MSREF's stake for a nominal sum.

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