CLP.L Share News (CLP)

Shares in investment company Clear Leisure slumped on Wednesday after announcing its decision to liquidate ORH SpA, its 73.43 per cent-owned hotel and travel business. The decision came after the discovery by the company of a sizable, undisclosed debt position mainly on the African hotels under ORH's previous management.The group explained that this "created a situation where the continuation of business activities by ORH has been considered uneconomical and the restructuring of this debt to be too expensive compared to the value of the assets under ORH's control".The group acquired majority control on the business in November 2012, and in June last year increased its holding to its current level. It has recovered 7.2m of the 14.4m shares issued to pay for the stake, and expects to recover the remaining 7.2m before February 15th 2014. Costs of £0.2m are expected to be incurred to cover both the legal procedure and for the reimbursement of ORH's customers who may claim a refund due to the disruption of services at their hotel, due to the closing of the operations. The Milan Criminal Prosecutor's office has begun an investigation into the illegalities relating to ORH's debt position, which the group hopes "will clearly establish which parties are responsible for the fraud, allowing the company to protect its rights". A statement released by the group read: "The wide-reaching ramifications of the above mentioned debt [... has] compromised the operations and reputation of the entire ORH brand. For this reason all the activities of ORH have been placed within the voluntary liquidation order."On a more positive note, the company is actively seeking to extract [...] any potential opportunities in the tourism sector, especially those related to the Italian hotel management market and web-based travel operations. The board cannot provide any degree of certainty regarding the success of these discussions at this stage in the process." It was, however, more confident that it may be able to successfully swap its potential tourism assets, or potential future rights in ORH, as the majority shareholder related to the ORH liquidation, with other tourism assets and activities. Dependent on the outcome of the negotiations, the maximum total loss for the company will be £2m, or 1p per share.The share price had fallen 13.64% to 1.90p by 09:20 Wednesday. NR