SURREY, U.K. — Shares in Britain's Ashtead Group Plc lost two-thirds of their value last month after the company said that accounting errors at its Sunbelt Rentals unit in the United States meant that pre-tax profits could have been inflated by about $8 million over two years.
Ashtead said costs at Sunbelt appeared to have been understated by about $4 million in both the year to April 2002 and the current year. It warned that profits this year were likely to be well below forecasts.
Shares in British pest-control-to-security firm Rentokil also dropped as much as 4 percent on fears that Ashtead might have difficulty paying back money it owes Rentokil on a loan note. Ashtead acquired Sunbelt Rentals from Rentokil in 2000.
An Ashtead spokesman, however, told Reuters the repayment of the $214 million loan, due to be repaid to Rentokil in June 2008, was not affected by its recent statement because it was still generating cash and profit. But a Rentokil spokesman said the loan was unsecured and not insured against a default by Ashtead.
Ashtead said it has suspended a senior member of its financial staff at Sunbelt.
Charlotte, N.C.-based Sunbelt Rentals is No. 5 on the RER 100.