Troubled engineering group Powerscreen International has bowed to pressure from its Irish institutional shareholders, and the chairman, Mr John Craig, will meet the institutions next Friday to discuss the crisis at the group.
While Mr Craig has agreed to meet members of the Irish Association of Investment Managers, next Friday's meeting at the offices of Goodbody Stockbrokers will also be attended by a number of British institutions who share the Irish institutions' concern at the recent events at Powerscreen.
The IAIM had pressed strongly for a meeting on the basis that it is the chairman - and not the executives - who has the fiduciary responsibility to shareholders.
Shortly after the disclosure of irregularities at the Matbro subsidiary - which will lead to a £47 million write-off - Powerscreen's chief executive, Mr Shay McKeown, met Irish institutions and received a broadly sympathetic hearing.
That sympathy, however, turned to anger and hostility after it emerged that the problems at Matbro were widely known in the industry as early as last November, when rival JCB informed its dealers of Matbro's difficulties.
Irish institutions provided the vast bulk of the £18 million raised by Powerscreen in mid-December. The money was raised to fund an acquisition in Northern Ireland. Those institutions bought their shares at 530p sterling and have seen the value of their investment halved, as Powerscreen shares plummeted after the Matbro announcement. The shares closed in London yesterday on 210p sterling.
The institutions will be looking for answers from Mr Craig about how the board, and the management, was apparently unaware of problems at Matbro when they were common knowledge in the industry a month before Powerscreen raised £18 million from investors.
The chairman can also expect to be questioned on the attitude of the board towards those executive directors who were unaware of the problems at Matbro.
Mr Craig, as chairman of the Powerscreen board's remuneration committee, can also expect to be asked his attitude toward the remuneration of the three executive directors, and especially to the bonuses of over £700,000 paid to them in respect of the year to the end of March, 1997.
He will also be questioned about the decision to appoint the group's auditor KPMG to investigate the Matbro irregularities. The IAIM has also suggested that KPMG would have a conflict of interest in this situation. An outside investigation is expected to carried out by Price Waterhouse.
