Desmond and Casey must come up with clear strategy

The past year has been a turbulent one for Unidare, with the company's shares continuing to sink like a stone and management showing little sign of being able to arrest the slide.

All that culminated in the abortive bid by Dermot Desmond and Pierce Casey to block the $60 million (€57 million) acquisition of Oklahoma Rig & Supply, a move that the two financiers fiercely opposed.

That opposition went all the way to the floor of the emergency general meeting called to approve the Oklahoma deal. The Desmond-Casey alliance narrowly failed to block the deal which went ahead on the back of a 51.7-48.3 per cent vote. Hardly a massive vote of confidence in Jack Casey and Paul Duggan and the rest of the Unidare board.

It was generally accepted that the board overcame the opposition of Desmond and Casey mainly because many institutional investors felt that the two rebels had failed to put forward a clear alternative strategy. "Better the devil you know. . ." was the way one fund manager described his reluctance to back Desmond and Casey.

That was reflected in the fact that Desmond and Casey only managed to garner the support of an additional 18.5 per cent of Unidare shareholders on top of the 29.9 per cent that the two already held.

Time has moved on since that July meeting, but Desmond and Casey - and indeed most of Unidare's long-suffering shareholders - will be looking ahead to next Monday's full-year results, the optimists in a spirit of hope, the pessimists with trepidation.

Analysts are pencilling in pre-tax profits of €7.9 million (£6.22 million) and earnings per share of 27.2 cents. But more significantly they are also expecting Unidare to pay a dividend of 23 to 24 cents a share. At the current price of €1.90, that means that investors can buy the shares when they carry a dividend yield of more than 12 per cent.

That's pretty attractive for investors who have to face low interest rates for their savings, but that sort of yield has to compensate for the likelihood that the shares aren't going to go anywhere, except in the unlikely event of a takeover bid.

Dermot Desmond and Pierce Casey are wealthy men and dividends are not the reason they bought into Unidare. So it will be interesting to see what approach the two men take ahead of the Unidare annual meeting in late February or early March. Will they use it to mount another withering assault? Dermot Desmond's lieutenant Michael Walsh was scathing about the performance of the board at last July's meeting.

Unless Desmond and Casey come up with a clear alternative strategy to persuade shareholders to vote against board re-elections, then it is difficult to see them being any more successful than they were last July. After all, shareholders who have bought into Unidare at current levels can sit back and get a 12 per cent yield on their investment in a company that is still going nowhere fast.