Cambridge targets banks for £10m

The Cambridge Group has elected a new board to pursue a £10 million claim against several banks. The new directors claim that the banks wrongly appointed a receiver to the company in 1993 and caused many of the its 2,200 shareholders to lose their money.

The public company, which was involved in leasing, was put into receivership after dramatic losses made its shares almost worthless. Mr Tom Grace of accountants Price Waterhouse was appointed receiver by the 13 creditor banks of the company. A statement from Price Waterhouse at the time said the banks appointed the receiver "at the request of the directors" of the group.

The new board was elected yesterday at an extraordinary general meeting. A group shareholders had the High Court to direct that the meeting be held, after it was told the company did not have any directors.

Cambridge floated on the stock exchange in June 1989, but by mid-1993 it had heavy losses.

The company's share price fell from 80p to less than 1p and many small investors lost large sums of money. After this its bankers decided to seek the appointment of Mr Grace.

At the e.g.m. yesterday, accountant, Mr Paul Mackay, who is the spokesman for the Cambridge Action Group for Equity (CAGE) and who was elected to the new board, said the banks had sought "unnecessarily" to have a receiver appointed to Cambridge because the company was a competitor to Bank of Ireland and Ulster Bank - two of the main creditor banks - in the Irish leasing market. This is rejected by both banks.

CAGE claims that more than 50 per cent of the shareholders of Cambridge supports the claim against the banks. Mr Mackay said the first thing the new six-person board will do is try to get possession of all documents relating to the winding up of the company. It is believed most of these are held by Mr Grace.

Mr Grace was not available for comment yesterday, but Mr Mackay said he will have to hand over all relevant documents to the new board which now has "total legitimacy". His fellow board member, solicitor Mr Peter Quinn, said the board would resort to the courts, if it could not obtain all relevant documentation. Next week the new board will write to the banks, to ask them to instruct Mr Grace to provide all documents.

The main document the new board wants to see is known as the Austin Report. This was produced after Bank of Ireland carried out its own investigation into Cambridge in September 1993. This report, which disclosed losses of £35 million at the company, may have been the reason the receiver was appointed, Mr Mackay told shareholders.

He added that several directors of the company at the time never saw or were given a copy of this report, which, he said, contained information about the banks' role in appointing the receiver.

The 120 shareholders in attendance were asked to contribute to a fund which will be used to pursue the claim. Mr Mackay said a fund of £50,000 would be needed to "fight" the campaign to have shareholders compensated and would not be used to pay directors.

One of the new directors is Ms Mairead Mangan, widow of Mr Conor Mangan, a former director of the company.

She told the e.g.m. that the collapse of Cambridge had a terrible effect on her husband and her family. She said her husband had invested the "family legacy of £350,000" in Cambridge and it had been wiped out overnight. Mr Mackay and the CAGE, while questioning whether a receiver was needed at all, claim that if an "orderly winding down" of the company had taken place £15 million of writedowns and losses could have been avoided.

"It is now very obvious that receivership was unnecessary, it was a ham-fisted action that was taken to wipe out an aggressive and irritant competitor," said Mr Mackay.

"Why did Bank of Ireland and Ulster Bank, major Cambridge competitors, take a leading and high profile role in the demise of your company," Mr Mackay asked the shareholders.

A spokesman for Bank of Ireland said last night that the receiver had still not recovered all the money which was due to the banks and there were "shortfalls". He added that the board of the company decided to appoint the receiver and no one suggested any alternatives, like appointing an examiner for instance.

He said any decision in regard to the Cambridge receiver would have to be taken between the 13 creditor banks involved, which also include ABN AMRO, Irish Intercontinental Bank, Barclays, AIB and several British banks.