Irish Times sued over running of Gazette Group

FORMER MEATH footballer Liam Hayes has brought High Court proceedings alleging the affairs of the Gazette Group of newspaper publishers, of which he is managing director, are being conducted oppressively by The Irish Times Ltd, holder of a majority stake in the group.

The claims are denied by the Irish Times respondents, including managing director Liam Kavanagh, who said they had lost confidence in Mr Hayes as managing director of the group, which had losses of up to €3.3 million up to March last.

Mr Kavanagh said he and Liam Holland, also of The Irish Times, had resigned as directors of the Gazette Group on June 2nd last as a response to the “complete lack of recognition” by the group’s management of its “parlous financial position”.

He denied Mr Hayes’s claim The Irish Times’s demand for repayment of a printing bill of €205,000 was designed to trigger a cash crisis within the group or amounted to breach of a printing agreement. He also denied further claims by Mr Hayes he had sought to interfere with the editorial integrity of the group’s newspapers.

The proceedings by Mr Hayes, brought under section 205 of the Companies Act, are against D’Olier Investments Ltd, a wholly-owned subsidiary of The Irish Times; Maeve Donovan, former managing director of The Irish Times; Mr Kavanagh and Mr Holland.

The case was mentioned briefly by Patrick O’Reilly, for Mr Hayes, before Ms Justice Mary Laffoy yesterday who agreed to adjourn it to July 12th.

The Gazette Group was founded by Mr Hayes and Michael McGovern in 2004 to launch Dublin regional newspapers and The Irish Times acquired an initial equity stake of some 47 per cent in the group in 2007, later increased to 52 per cent.

In an affidavit, Mr Hayes said the relationship between himself and The Irish Times/D’Olier Investments Ltd, as an investor in the group, was “well-balanced” until Ms Donovan retired as managing director of The Irish Times about March 2010.

He said issues had arisen since, in which Mr Kavanagh has had an input, which have caused difficulties. He also said Mr Kavanagh had on June 11th last offered a new capital structure to the group in exchange for the exclusion of Mr Hayes and payment of €1 for his shareholding. This conduct, plus the resignation of The Irish Times appointees to the board, amounted to oppression of his rights, he said.

In his petition, Mr Hayes is seeking a declaration the respondents have conducted the affairs of the group in a manner oppressive to the interests of Mr Hayes. He also wants orders restraining the respondents procuring a breach of a 2007 shareholders agreement; for all necessary accounts and inquiries into the profits of the company and directing the respondents to purchase his shareholding at a value to be determined by the High Court.

In his affidavit, Mr Kavanagh denies the respondents have sought or orchestrated Mr Hayes’s removal as a director of the company and, in those circumstances, argues Mr Hayes’s proceedings are premature.

Mr Kavanagh said the Gazette Group had sustained losses of some €3.3 million up to March last and Mr Hayes’s solution to cash-flow difficulties was either to delay or defer payment to the Revenue Commissioners or not to pay the Irish Times’s print bill. This situation was “unacceptable” to The Irish Times.

The Irish Times’s print agreement with the Gazette Group was entirely separate from the shareholders agreement, he added.