Receiver named as Marlborough suspends trade

The future of the Marlborough recruitment group - one of the biggest in the State - has been thrown into doubt after a receiver was appointed to the company yesterday and its shares were suspended on the Dublin and London markets

In a statement, Marlborough said trading in the past two months had been so difficult that the company was not in a position to fund its operations. The company's efforts to sell its businesses in Britain could not be completed in time to rescue the situation. Mr David Hughes of Ernst & Young has been appointed receiver.

Marlborough chief executive Mr David McKenna said the company was within a matter of days of finding buyers for its two British businesses as part of a restructuring agreed with the group's banks.

He added, however, that one of the purchasers had since said it could not go ahead with the purchase for "weeks and possibly months" and this withdrawal meant that the restructuring collapsed. "We then had no option but to ask the banks to appoint a receiver," Mr McKenna said, adding that, if the asset sales had gone ahead, some €7 to €8 million would have been generated.

Mr McKenna would not speculate on the prospects of the receiver finding a buyer for the company. Given that Mr McKenna himself was unable to complete a management buyout (MBO) last year, sources said the prospects of the receiver Mr Hughes finding somebody to rescue Marlborough as a single unit were not high and the company may have to be broken up.

The suspension followed some heavy trading early in the day, where some 160,000 shares dealt as the price rose two cents to €0.17. Marlborough shares had fallen heavily from €0.25 to €0.15 earlier this week and this very timely selling is likely to be the focus of an investigation by the Irish Stock Exchange.

Marlborough's results for the 10 months to the end of December (the year-end was brought forward from February) are currently being prepared. Half-year results to the end of August showed that the recruitment group had net debt of more than €24 million. In that six-month period, Marlborough reported a loss of €1.17 million compared to a €5.3 million profit in the first half of 2000.

More than most companies, Marlborough has suffered from the downturn in the recruitment sector. This downturn has been accompanied by a dramatic collapse in the share price from €1.40 last year to the recent €0.15.

Not long after its 1997 flotation, Marlborough traded as high as €5.35, valuing the company at €150 million and Mr McKenna's 45 per cent stake at some €67 million. Mr McKenna also sold €5 million worth of Marlborough shares at the time of the flotation. At the €0.17 suspension price, Marlborough is worth just €5.4 million and Mr McKenna's stake is worth €2.4 million.

Last year attempts by Mr McKenna to take Marlborough private through an MBO collapsed amid speculation that Mr McKenna was unable to persuade the banks to provide the funds to buy the 55 per cent of the company he did not own.

The collapse of the MBO also lead to the resignation of two non-executive directors, Guinness Ireland executive Mr Clive Brownlee and Coca-Cola executive Mr Irial Finan.