Two American funds have increased their stakes in Regus over the last week. Cantor Fitzgerald has built a 4.75% share and Indigo Capital has acquired a 5.15% stake. There is also speculation the real estate fund run by George Soros, rival property company Workspace Group and two venture capitalists, Apax and Alchemy, have held talks with founder and majority shareholder Mark Dixon.

Regus was floated in October 2000 at the height of the dot-com boom which created a huge demand for small and temporary office space. At its peak, the company was valued at £2.2 billion ($3.4 billion) but since then its shares have crashed as demand has fallen and Regus is worth just £46.5 million ($73.3 million). In September, Regus reported a third-quarter loss of £13.1 million ($20.6 million) against a £10.6 million (£16.7 million) loss for the same period last year. The company has also seen its share price fall from a peak of 392p shortly after its October 2000 flotation to less than 9p.

The big stumbling block is the 62.9% holding founder Mark Dixon has in the company and which analysts believe has deterred potential investors and joint venture partners in the past. But it is now thought that Dixon accepts that if the company is to survive there will have to be a big dilution in his stake and he is said to be willing to give up a 51% share in order to secure the company's future.

The group urgently needs a capital injection to keep his worldwide network of offices operational. Deutsche Banks estimates that unless additional funding is found Regus will run out of cash by June 2003 while £50 million ($78.9 million) is needed to see the company through into 2004.

Options for raising cash are limited. Borrowing money would be difficult as Regus has few physical assets to act as security and most of the company's offices are leasehold. The company is also thought to ruled out securitisation, which leaves finding a new investment partners and the dilution of Dixon's stake.