U.S. Stake in Maxwell Loans Small

Citicorp, Bankers Trust Among Minor Casualties

LONDON -- Citicorp and Bankers Trust New York Corp. are among the casualties from the collapse of Robert Mawell's media empire, but their exposure is nowhere near that of London's biggest banks.

Estimates of total indebtedness of Mr. Maxwell's empire run as high as $6 billion, mostly owed to banks. National Westminster, Britain's second-biggest bank, reportedly has the largest lending involvement to the Maxwell interests, with a commitment estimated at about $365 million.

Among other big London banks, Lloyds Bank PLC has lent about $300 million, Barclays PLC about $255 million and Midland Bank $250 million, according to industry analysts.

Foreign Exchange Involved

Citicorp is owed about $30 million from Maxwell interests. The money represents foreign exchange trades that the British publisher could not settle, rather than specific loan commitments.

Stocks and shares in certain Maxwell companies were pledged to Citicorp as settlement of the currency debt. While Citicorp has sold some shares, its ability to liquidate to remaining collateral has been prevented by a freeze on Maxwell dealings on the London stock exchange.

Citicorp also remains a holder of about 2% of Maxwell Communication stock.

Meantime, key valuations of portions of Mr. Maxwell's empire provided only weeks ago by Bankers Trust now appear to have been inflated.

Bankers Trust reported to bank lenders that private Maxwell assets had a gross value of $2.1 billion to $2.5 billion.

Richard Stone, a corporate rescue specialist at accountancy firm Coopers & Lybrand Deloitte, appointed by bank creditors, has signaled that the debts of the private companies were much larger than expected.

An estimated $530 million of company transfers originated from Maxwell Communications and Mirror Group, thus inflating intrinsic values of the Maxwell private interests.

Response by Bankers Trust

A Bankers Trust spokesman insisted that the bank had carried out a professional valuation of the private interests within the time requested.

The mandate "was to do the valuation of assets only, not liabilities or assessment of cross-company transfers and was based on a group of companies then judged viable as a going concern," the spokesman said.

In addition, the valuation was conducted before last week's revelations of extensive inter-company transfers, such as raids on company pension funds in order to provide collateral for loans and working capital.

"In principle, the conduct of [our] valuation was entirely on the lines requested by clients and was based on legimitate assumptions at the time."

Natwest Downgraded

A British brokerage house, Smith New Court Securities, Monday has downgraded its 1991 earnings forecast for NatWest to a loss of $35 million.

Smith New Court analyst Alison Deuchars said that Maxwell exposures were responsible for only part of the bank's deteriorating earnings prospects.

"We are projecting a higher-than-expected cost for [personnel] redundancies as well as increased provisions for small personal and corporate bad debts," she said.

In 1990, NatWest earned a pretax profit of $897 million, compared to $720 million in the previous year. In the first half of 1991, it earned $180 million.

A NatWest spokesman declined to comment, though he said the bank "cannot be immune" from Britain's severe economic recession in the banking and industry sectors.

As many of the various 400 companies in the Maxwell empire are taken into administration, a form of Chapter 11 bankruptcy protection, the full scale of debts of the group is becoming apparent.

The major portion of the $3 billion in outstanding debt is owed by Maxwell Communications Corp. Mirror Group Newspapers owes an estimated $625 million.

A well-placed source estimated that amount of funds that has been shifted among Maxwell companies in recent weeks to keep the empire afloat was about $2.4 billion.

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