The managing director of Goodbody Stockbrokers, Roy Barrett, has told the High Court that DCC chief executive Jim Flavin did not negotiate the sale of the company's stake in Fyffes.
Mr Barrett said that when he phoned Mr Flavin to bid for part of the DCC stake in Fyffes on February 8th and 14th 2000, Mr Flavin said he had "no authority" and had referred him to a director of a Dutch-registered DCC subsidiary.
Mr Barrett told Kevin Feeney SC, for DCC, that he didn't have a clear recall where the price of €3.20 per share came from at the time of the sale of the first tranche of the Fyffes shares on February 3rd, 2000. He said he suspected it arose from a conversation between himself and Kyran McLaughlin of Davy Stockbrokers.
Mr Barrett said Mr Flavin had told him, when Mr Barrett rang him on February 8th and 14th, that the appropriate person to contact was a director of the DCC Dutch-registered subsidiary Lotus Green Ltd (to which beneficial ownership of the Fyffes shareholding was transferred in 1995 by DCC for tax reasons). Mr Barrett said he was not surprised about Lotus Green and presumed it existed for tax purposes.
Asked why, having been told by Mr Flavin on February 8th that the appropriate contact was Lotus Green, Mr Barrett again rang Mr Flavin on February 14th, Mr Barrett said he did so because his approaches to Mr Flavin on February 3rd and 8th had proved very effective. "Why change a winning formula?" he asked. Mr Barrett also said that, when he had first phoned Mr Flavin either in late January or very early February 2000 to inquire whether the DCC stake was for sale, Mr Flavin had initially said it was not.
Mr Barrett said he had pursued the issue and ultimately Goodbody and Davy put together a joint bid on February 3rd, 2000, for some 17.8 million shares at €3.20 per share which was made to DCC through Davy. He believed the market price at the time was €3.30.
He said he had not discussed with Mr Flavin what commission was to be made on the sales to the brokers. He said Goodbody's did not have taped records of his conversations with Mr Flavin. In accordance with stock market regulations, the tapes were kept for three months and later destroyed.
Mr Barrett said it was his firm view that the rise in the Fyffes share price in early 2000 was driven by investor hopes for Fyffes' e-commerce venture, worldoffruit.com. He said the market would have been aware that the trading environment for Fyffes in late 1999 and early 2000 was difficult due to weak and falling banana prices and unfavourable currency fluctuations.
Mr Barrett said he had discussions after the share sales of February 2000 with David McCann and Carl McCann, respectively chief executive and deputy chairman of Fyffes, about the sales and he believed they were happy and content.
However, after Fyffes issued a profit warning in March 2000, a lot of institutional investors who had bought the Fyffes shares were upset with Goodbody and Fyffes, he added. He didn't believe that discontent was aimed at DCC. He believed institutional investors were irate with Fyffes because there were investor presentations by Fyffes in February and March 2000 and at no time then had Fyffes alluded to any trading difficulties. The criticism of Fyffes was probably unfair criticism at the time, he said.
Mr Barrett was giving evidence on the 61st day of proceedings in which Fyffes alleges "insider dealing" in connection with the €106 million sale of the DCC stake in Fyffes over three days in February 2000. The action is against DCC plc, Mr Flavin and two DCC subsidiaries - S&L Investments Ltd and Lotus Green.
The defendants deny the claims and plead the share sales were properly conducted by Lotus Green. Ownership of the DCC stake was transferred to Lotus Green in 1995 to avoid payment of capital gains tax on any subsequent sale of the shareholding.
In cross-examination of Mr Barrett later yesterday, Paul Gallagher SC, for Fyffes, suggested that a written response from Goodbody to Irish Stock Exchange (ISE) inquiries of September 2000 about the sales of the Fyffes shares contained matters at odds with Mr Barrett's evidence to the court.
Mr Barrett agreed that the Goodbody response was based on information supplied by himself. He agreed the response stated that it was Mr Flavin who had suggested on February 3rd that Davy and Goodbody try and put together a bid for the shares.
Mr Barrett said that was incorrect. He said he was clear it was he, and not Mr Flavin, who had suggested that the two firms try and put together a bid. He agreed that he had reviewed the Goodbody response to the ISE before it was sent out and had not altered it at that time. He said he had not given the matter enough time when reviewing it. He said there were certain aspects of the letter which were not reflective of what actually happened.
Mr Gallagher said the response stated that Mr Barrett had contacted Mr Flavin from time to time from late January 2000 to keep him in touch with market conditions. He said that was correct save that the first contact he had with Mr Flavin in this period was to try and ascertain if he would sell the Fyffes shareholding. His primary reason for talking to Mr Flavin was to secure an offer of shares.
Mr Gallagher suggested there was clearly a discussion on the price of the shares during those conversations. Mr Barrett agreed that there was a discussion on the "market price" and that, when Mr Flavin had initially told him the shares were not for sale, Mr Barrett had told Mr Flavin he thought there wouldn't be a significant discount, if any, on the market price.
He said that he never discussed a "specific price" with Mr Flavin, he may have told him what the "prevailing price" was but never entered a conversation about what Goodbody was prepared to bid and in what size.
The case continues today before Ms Justice Laffoy.
