Davy Hickey investors sue amid row over Citywest developer’s future

A group of investors in Davy Hickey Properties are suing directors of a central firm in the group, accusing them of "oppression and disregard" of minority shareholders' rights amid a battle over the future of the Citywest Business Campus developer.

Davy Hickey, formed in 1990 as a joint venture between businessman Brendan Hickey and Davy executives and clients, is behind the development of the 350-acre business campus in southwest Dublin and other sites.

The assets and business of the group's main company DHP (IOM) Limited, aside from its cash, were transferred to a new company called Oviedo Limited last December. Investors in DHP hold the same stakes in Oviedo.

David Shubotham, a former top Davy executive, claimed in an affidavit filed with the High Court on May 10th, seen by The Irish Times, that he and some other shareholders were "completely taken aback and utterly appalled" when told in March 2018 that DHP had decided to halt the business. The plan at that time was to pay out its cash to most shareholders and allow Mr Hickey "to take key assets, at undeveloped land values, and retain the ongoing business" in lieu of his cash entitlement, he said.

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Vehicle

Mr Shubotham and a group of other shareholders, including Paul Coulson, the chairman and chief executive of packaging giant Ardagh Group, set up a vehicle, called Fulman, to combine their combined 33.7 per cent shares and resist the plan.

“There was no independent report and valuation of the company or its assets attached to the proposal and there was no indication that corporate finance or other appropriate advice had been sought by the board, so as to enable it to table plans that would maximise the value of the company for all its shareholders,” he said.

“It is also astonishing that the board failed to take independent advice in circumstances where it tabled a plan to allow the senior executive in the company to receive preferential distribution of some of the company’s major assets and where it would appear the board was unfamiliar with the development potential of the assets. This contravenes the most basic principles of proper corporate governance.”

While Fulman "successfully opposed" the March 2018 plan, Mr Hickey and the property group's managing director, Hugh Lynn, "with the co-operation of the others of the board have blocked every attempt" by Fulman to get information about the assets.

Both men and fellow Oviedo directors and shareholders Kyran McLaughlin, Davy's former deputy chairman, Glen Dimplex electrical goods founder Martin Naughton and former chairman Brian Davy are the other main respondents in the case. Mr Davy is also a former chairman of Davy, the stockbroking firm that was co-founded by his father.

Mr Shubotham said he understands Mr Hickey “controls at least 26.7 per cent” of Oviedo, which holds freeholds on land in Citywest, commercial and office buildings and retail and development sites in the same area, stakes in properties on Leeson Street and interests in two land banks in Co Meath.

DHP’s assets and business were transferred to Oviedo at a value of €39.7 million, though Fulman believes that the true value is “far higher”, according to Mr Shubotham. While Fulman offered late last year to buy Oviedo for €80 million, the board refused to allow it carry out proper due diligence to pursue the bid, he alleges.

In addition, Oviedo has now decided that the Leeson Street assets and Citywest freehold should not be sold, as they had “potential future added value,” according to the affidavit. “This was a complete about-turn from the position which the board of DHP had adopted since March 2018 and was a recognition that Fulman had been correct in their criticism of the DHP board’s willingness to dispose of these assets to Mr Hickey all along,” it claims.

Orders sought

Fulman is seeking court orders directing Oviedo to get independent expert corporate finance and property reports on its assets and make them available to investors before any disposals. These should say whether investors would get most value from the sale of the business as a going concern or break-up basis.

A spokesman for the board of Oviedo said that it “notes that legal proceedings have been issued by Fulman Holdings Sarl – a shareholder in Oviedo Limited – against a number of other shareholders in Oviedo Limited”. He declined to comment further.

Mr Hickey and Mr Lynn did not respond to efforts to secure direct comment, while Mr Davy and Mr McLaughlin declined to comment when contacted by The Irish Times. Efforts to secure comment from Mr Naughton were unsuccessful.