McLoughlin says he will go after demerger of Crean

The chief executive and chairman of James Crean, Mr Ray McLoughlin, is expected to retire after the process of demerging the food and printing and packaging company is complete. Shareholders, in a protracted meeting, yesterday approved resolutions to change the printing and packaging division into a separate company, OakHill Group.

The new company's board would have a dedicated management team, and be able to focus on going forward with no distractions, Mr McLoughlin said.

After the meeting, Mr McLoughlin said he had been wanting to retire for some years. "I just stayed here to try and complete this restructuring process," he said. He added that he hoped to sell the 20 per cent stake Crean has in OakHill within 12 months. "When the time is right is really when we will sell it."

The 20 per cent stake had arisen from inter-company debt and not from the raising of funds. "The board decided that, splitting the balance sheet in the optimum way, that debt should be converted into equity," he said.

The company's stated policy is that "the introduction of a substantial strategic investor into OakHill would be a major factor enabling it to achieve its growth objectives," according to the notice of the meeting. Among the non-executive directors of OakHill is Mr Denis O'Brien, the chairman of Esat Telecom, who was present at yesterday's meeting.

Mr McLouglin said the matter of separating the function of chair and chief executive, created when the former chairman, Mr Domhnall McCullough, resigned in December, 1997, would be dealt with "shortly".

During the meeting, a number of shareholders said the directors should resign and a "completely new restructured board and restructured management" should be installed. Mr McLoughlin said the suggestions had been noted and would be brought up at board level.

He told shareholders that since 1995 the share price of Crean had dropped by 60 per cent. It is currently at 95p (€1.20), although shareholders were told the net asset book value of Crean and OakHill together is 110p (€1.40). He said 90 pence of the drop was estimated to be due to a lower rating, partly due to diversified holdings companies being out of favour and also to "the small cap syndrome". But Mr McLoughlin, who owns 10.1 per cent of Crean, defended the company's record against trenchant criticism. He said "by and large" the company had been successful with its acquisitions. The internal rate of return for the electrical division, which has been sold, was 25 per cent, for the food division, about 30 per cent, and for the printing and packaging division, about 25 per cent, which had been reflected in dividend payments.

He had not sold shares since 1994, he said. "I am back down by £3.4 million. Buying shares adds to my losses if it goes down. I have made my commitment in financial terms."

The future of Crean's remaining US food division would be considered following the demerger. It was facing three options, Mr McLoughlin said - its sale with proceeds going to shareholders, the finding of a strategic partner to develop it, or a share-buy back scheme which would increase the return on remaining shares.

Speaking of the year to date, he said operating profits in print and packaging were 10 per cent ahead of last year, and the food division was 12 per cent ahead, although there were volume contractions in the frozen sector of as much as 10 per cent, instead of the envisaged 5 per cent.