Former Dunloe boss told of plan to expand assets

DIRECTOR ON TRIAL: The former managing director of Dunloe Ewart, Mr Philip Byrne, was told about a plan to expand significantly its assets when he was asked to join the company.

Mr Byrne has denied two charges of insider dealing relating to the sale of 260,000 Dunloe House (now Dunloe Ewart) shares at a time when, the prosecution alleges, he was in possession of price-sensitive information that was not generally available. The shares were sold by Mr Byrne (44), of Trafalgar Terrace, Monkstown, Co Dublin, between April 27th, 1997 and May 9th, 1997.

Mr Noel Smyth, chairman of Dunloe Ewart, told Mr Paul Gallagher SC, for Mr Byrne, that he explained his overall plans for Dunloe to Mr Byrne when he was invited to become involved in Mr Smyth's company, Aviette Ltd, in late 1996.

When Mr Byrne officially took up the offer, in May 1997, heads of agreement had been signed by Mr Smyth, Mr Phil Monahan and Mr Dominick Glennane, involving the merging of assets which would then be absorbed into Dunloe.

However, Mr Smyth said, he explained to Mr Byrne that the heads of agreement "couldn't be counted on".

It was not until other documents were signed, in June 1997, that he became "a lot more confident" that the deal might go ahead.

The trial heard that the properties to be merged at one stage involved Somerton, a house and 160 acres in Castleknock, Co Dublin, which belonged to one of Mr Monahan's companies. However, this asset did not form part of the final deal as it included Mr Monahan's family home.

Mr Smyth told Mr George Birmingham SC, for the prosecution, that it was never expected that the substantial funds needing to be raised as part of the deal would be raised by issuing shares at other than a significant discount on the then market price.

A large number of shares was never going to be taken up at "anything near the market price", Mr Birmingham suggested. Mr Smyth agreed.

Mr Stewart Harrington, the then managing director of Dunloe House, said he was very pessimistic in July 1997 that the €31.7 million (£25 million) required for the proposed deal could be raised. However, a roadshow held in July and August was successful.

The trial, before Judge Dominic Lynch, continues.