Secretary 'uncomfortable' at investor meetings

Fyffe's secretary was conscious that he had to be 'very, very careful' about what he said at investor presentations in Frankfurt, writes Colm Keena.

Yesterday Fyffes' company secretary Mr Philip Halpenny told of how he attended a series of investor presentations in Frankfurt on March 15th, 2000, accompanied by Mr Leslie Williams of Goodbody stockbrokers, just one day after he had worked on a draft of a profit warning.

The warning was issued on March 20th at the Fyffes a.g.m. and within two days the Fyffes share price had fallen by almost 25 per cent.

Mr Halpenny told Mr Michael Ashe SC, for DCC, that he was "very uncomfortable" while attending the Frankfurt meetings. "I remember that it was an occasion that I was very, very unhappy being in... I did not want to travel but by not travelling I might have sent out information as well."

He was conscious he had to be "very, very careful" about what he said. According to the Fyffes witnesses to date, the company issues statements as to expectations for a coming year, and then maintains that position in public until it believes the time has come when it must issue a revised opinion.

The board's view as to its prospects for the year 2000, published in December 1999, was cautiously optimistic but, chief executive Mr David McCann has said, did not represent underlying trading concerns that existed at the time.

Mr Halpenny, at his meetings in Frankfurt, was careful that his comments concerning trading were similar in tenor to the December statement. It would be unfair if he gave information to the potential investors in Frankfurt, which was not available to the market generally, he said.

In February, Davy and Goodbody stockbrokers were involved in placing Fyffes shares worth €106 million with a number of investors. The shares were sold by DCC whose chief executive, Mr Jim Flavin, sat on the Fyffes board.

After March 20th, very irate Goodbody executives were "screaming" down the phone at Mr Halpenny because good clients of theirs had lost money, according to Mr Carl McCann, chairman of Fyffes.

"The comments were negative and unkind and unfriendly and hostile to the point that I had to subsequently phone Mr Roy Barrett, who was managing director of Goodbody's, to say to him that this was unfair and unreasonable and to ask him to get the guys not to do that. So I have personal awareness of what happened and it was fairly nasty."

A former partner in Goodbody's, who was not named yesterday but who was named last week, Mr Tom Cunningham, wrote to Fyffes in the wake of the profit warning. His letters raised issues that are now at the heart of the court case. His investment in Fyffes at the time was worth approximately €500,000.

In a letter to the then Fyffes chairman, Mr Neil McCann, the day after the profit warning, Mr Cunningham said profit warnings were a part of life but he was concerned at mention at the a.g.m. that the difficult trading at the heart of the warning had occurred in November/ December 1999.

This would seem to support the case being made by Fyffes that information Mr Flavin had in February 2000, concerning trading in November and December 1999, was price sensitive. At the time of the a.g.m., Fyffes was not considering taking any action against Mr Flavin and DCC.

What concerned Mr Cunningham was why the warning had not been issued earlier. He was concerned that Fyffes would become "tainted" by the events of February and March.

Lawyers were consulted prior to Mr McCann's written response to Mr Cunningham on May 11th, 2000. Fyffes was still not contemplating legal action against DCC.

The letter said the company was not in a position to make a properly informed assessment as to the need to make a profit warning, prior to the date when it did make its decision. "We are satisfied that an earlier announcement would not have been merited based solely on the performance in November and December."

In a final letter in August 2000, Mr Cunningham, among other issues, mentioned the DCC sale of Fyffes shares. "What Mr Flavin knew or did not know is, I think, likely to be speculated on at length over many a business lunch. That the conclusions arrived at are unlikely to be flattering either to Fyffes or DCC is an opinion I share with others."