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More take-overs rumoured in the sub-prime market

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  • 04/12/2001
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The futures of Kensington, Mortgages plc and SPML are in the spotlight

Speculation is growing that Kensington Mortgage Company will be the next sub-prime lender heading for a buy-out, due to rapid share price increases since the lender’s flotation.

Kensington’s shares have seen a 20% rise, but at the time of going to press, market analysts were saying the shares could be heading for a fall and the only reason they had increased was due to press speculation over a take-over and a recent general meeting where the company was granted permission by shareholders to purchase its own shares.

The lender denied the possibility of an imminent buy-out. Alistair Pate, marketing and strategy manager at Kensington, said: ‘We are not expecting anything to happen. There is a lot of speculation about a possible take-over. But there really is nothing to report, it is based on nothing but rumours.’

The speculation coincides with the confirmation that another sub-prime lender, Mortgages plc, is to sell to a blue-chip company.

Paul Howard, sales and marketing manager at Mortgages plc, said the firm expected to make an announcement in the next few weeks.

‘Discussions have gone extremely positively, although matters have been delayed by the recent worldwide events. However, we are confident that the buy-out will be positive news for customers.

‘All the potential buyers are blue-chip companies and depending on the buyer, post-transaction we believe we will be able to offer even better products and services which will not just be good news for us, but for the industry as a whole,’ he said.

Howard said he expected the remaining sub-prime lenders to follow their leads. ‘If you look at the list of our peers, almost all have been either acquired in total, or have significant share holdings. Lehman Brothers is rumoured to have a 70% share in SPML and it is thought it is looking to sell its investment,’ he said.

SPML refused to disclose any information attached to the rumours. Bill Cherry, managing director at SPML, said: ‘It is not company policy to comment on any rumours that are current in the market- place and we cannot contravene this policy in the present circumstances.’


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