Six Continents shows how to split pubs from hotels

Six Continents will today publish extensive details of how it proposes to demerge its international hotels business from its UK pub and restaurant operations.

One Six Continents insider said the document would be to be "a weighty tome", providing investors with detailed analysis of the two divisions, how they are to operate independently, and an outline of risks for shareholders.

Investors will also be looking for details of cost reviews across both divisions, proposals for the treatment of the group's £1.3bn debt, and information on how a pledge to return £700m to shareholders will be honoured.

Analysts have been disappointed by Six Continents' record on converting costly hotel spending and refurbishment programmes into profits. One said he was left "a little bewildered" by the level of profits coming into the business given in a trading update at the company's annual shareholder meeting last week.

It is hoped today's document, known as the Listing Particulars, will also provide an update on the £100m approach Six Continents received three months ago from property developers looking to buy the freehold on the group's Mayfair InterContinental.

The particulars are likely to attract interest not just from shareholders, but also from potential bidders thought to be waiting in the wings. Hugh Osmond's Sun Capital Partners and Cinven are among the private equity names said to be interested in the pubs and restaurants business. Some analysts believe that, under Six Continents' current chief executive Tim Clarke, this division may eventually be linked up with to Scottish & Newcastle's pub interests.

Meanwhile, the hotels division, which is to be run by Six Continents' finance director Richard North, appears as likely to attract interest from property and financial buyers as from hotel competitors.

At the end of last week, however, many analysts were suggesting that bids were less likely to emerge in the coming weeks as the prospect grew of war in the Middle East. On Friday, terrorism alert levels were raised both by the British government and by the US homeland security department. "Six Continents is not another Safeway," one analyst put it.

Mark Abramson at Bear Stearns said there was "growing evidence this week of travel cancellations/interruptions due to terrorism alerts... With increasing tension in the Gulf, we believe there is a high degree of near-term risk to the hotel sector and Six Continents shares in particular."

Mr Abramson warned that European hotel operators could be facing a wave of downgrades from credit rating agencies, following similar moves in the US as the economic outlook for this year was judged to have darkened. Among European hotel businesses which could be hit hard by such a move are Hilton and Accor.