Payoff anger as Wheway yields to bid
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.WHEWAY, the loss-making and heavily indebted engineering company, yesterday capitulated to McLeod Russell, the paint group, giving in as angry shareholders gathered for its annual meeting in Birmingham.
The Wheway board's acceptance of the McLeod bid after four months of talks did little to calm tempers at the meeting. Hugh Ashton, chairman, had to fend off a series of quick-fire, hostile questions. Despite the bid recommendation, private shareholders focused on severance payments due to past and incumbent Wheway executives.
Wheway disclosed it had borrowings totalling pounds 22m - equivalent to nearly 150 per cent of its net assets. Since the autumn, Wheway has admitted it needed to find a partner to provide financial support. Yesterday the company said talks with rival suitors had proved fruitless. 'Although the offer does not recognise the relative sizes of the two companies in terms of turnover or potential, it does recognise the weak state of Wheway's balance sheet,' Mr Ashton said.
John McGowan, the company's chief executive for 10 years until his departure last November, is set to receive pounds 407,000. He has claimed pounds 280,000 for loss of office, pounds 79,000 pension contributions, pounds 12,500 legal costs and pounds 9,000 a month in consultancy fees until next May.
In November, while talks with McLeod were under way, Mr McGowan was replaced by Brian Long as chief executive. Under the new McLeod management, neither he nor a new finance director, Brian Boswell, is likely to be required.
However, Wheway has promised to pay Mr Long pounds 230,000 if the company is taken over. Mr Boswell has a two-year service contract at pounds 85,000 a year. In all, severance payments could reach pounds 800,000 or more.
One private investor at yesterday's meeting asked Mr Ashton if it was possible 'to question or preferably cancel payments to Mr McGowan in view of the group's lamentable performance while he was in charge'.
Mr Ashton told him that the pay agreements were legally binding. He added that Mr McGowan had not received his full entitlement under the strict terms of his contract.
The McLeod offer takes the form of a one-for-10 share swap, which values each Wheway share at 9.5p and the whole company at pounds 13.3m, with McLeod Russell down 5p at 95p.
Nigel Openshaw, McLeod's chairman, pledged to hold a full review of severance terms in his company's offer document, which said: 'It is not proposed . . . that any payment or other benefits shall be made or given to any director of Wheway as compensation for loss of office.'
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments