A co-founder of the Davy Hickey property group claims executives have disregarded efforts to realise the maximum value for property worth at least €40 million, including the 350-acre Citywest campus in Dublin, the High Court has heard.

Former Davy Stockbrokers high-flier David Shubotham formed Davy Hickey in 1990 along with Brendan Hickey and a number of other investors. Now he is claiming mismanagement/shareholder oppression by the board of Davy Hickey-related company, Oviedo Ltd, which was specifically set up to convert the property assets into cash.

Mr Shubotham is a director of Luxembourg-registered firm, Fulman Holdings, a 34 per cent shareholder in Oviedo, which is claiming mismanagement sufficient to establish shareholder oppression in the company.

Pending the hearing of those claims, Fulman is asking the court for an injunction restraining the Oviedo board disposing of the property assets until an independent report/valuation is obtained.

Oviedo’s directors and other shareholders, who between them hold the majority of shares in Oviedo, deny Fulman’s claims. It is argued Fulman’s conduct is an attempt to subvert the mandate given to the board to dispose of the assets.

It is further argued a democratic decision was taken by the board to sell the assets, they are being advertised for sale at full value on the open market, and Fulman is simply not happy with that approach.

Monopoly of information

Mr Shubotham claims, among other things, the Oviedo board’s proposal involves Brendan Hickey taking certain key undeveloped property out of the sell-off proposal about which he had, and has, “a monopoly of information”.

The injunction application is being heard by Mr Justice Denis McDonald. He was told on Thursday by Michael Cush SC, for Fulman, it was his side’s understanding that, when the asset conversion (to cash) proposal was first made, Mr Hickey intended to retire from the property business.

Mr Cush said the five Oviedo board members – Mr Hickey, Hugh Lynn, James Brian Davy, Kyran McLaughlin and Martin Naughton – against whom Fulman is seeking orders, have thwarted due diligence efforts by Fulman to obtain important information for the full realisation of the value of the assets.

If the court grants the order requiring a report/valuation, it could end the need for a trial of the oppression/mismanagement claim, counsel said. However, if the board does not take the independent advice from that report, the case would proceed, he said.

Specific purpose

The court heard Oviedo was formed last December with the specific purpose of taking the transfer of non-cash assets, including 30 subsidiaries, from an Isle of Man company, Davy Hickey Properties (DHP), which has developed and managed the assets over a number of years.

Those assets include the valuable Citywest commercial land, property in Leeson Street, Dublin (the Sugar Club and Lavery House) and development sites in Navan and Bettystown, Co Meath.

Mr Cush said Oviedo was no ordinary company because its pre-determined purpose was to cease trading after it had realised value (of the assets) for the shareholders in a very short time. Fulman opposed this wind down strategy and advocated retaining the assets and generating cash/liquidity by disposing of developed properties on a leveraged basis.

The Oviedo board, which has the same members as Davy Hickey Property, refused requests for transparency about the business or to allow an independent valuation, Fulman said.

The transfer of the assets to Oviedo, last December, was at a value of just under €40 million. Fulman says the value is much higher and it (Fulman) at one point offered €80 million to acquire the business and assets.

Mr Cush said the board also subsequently “changed tack” and decided to hive off and not sell certain of the assets, including Leeson Street and the Citywest freehold, although it previously insisted all these assets be sold.

Paul Gardiner SC, for the company, said this was a case in which a democratic decision in relation to the liquidity conversion strategy had been taken.

He said 28 per cent of shares are held by the directors, 34 per cent by Fulman and 28 per cent by other shareholders including Davycrest Nominees, Lusard Management, Neil Naughton, Fiona Naughton and Claire Hickey. No orders were being sought against those 28 per cent shareholders and no wrongdoing was alleged against them.

It was their case the mandate, of the 64/34 per cent vote in favour of the board’s strategy, was being subverted by the conduct of Fulman, he said. There was also nothing to stop Fulman from bidding for the property currently for sale.

The hearing continues on Friday.