THE start of Jim O'Mahony's troubles at Golden Vale can be traced to a Friday afternoon two years ago this week. At 4.51 p.m. on June 16th, 1994 the agri business company earned the wrath of the Dublin market when it issued a warning that profits for the year could be up to one third lower than the £19 million recorded 12 months earlier.
Notifying the Dublin market of much a crucial fact late on a Friday afternoon is almost guaranteed to antagonise dealers and fund managers. But this was no ordinary Friday evening. Ireland were playing Italy in New York the next day and by the time the announcement was made, many hey players were already somewhere over the Atlantic.
The recent announcement that Golden Vale was to pay arrears of £3.1 million on its milk superlevy bill - which appears to have precipitated Mr O'Mahony's departure - had many parallels with events two years ago.
Once again the company was criticised for the way in which the news was released to the Stock Exchange. Following comments by the Minister for Agriculture, Mr Yates, a statement was issued to media organisations after the close of trading. The market was not informed officially until the next day.
Golden Vale's farmer suppliers were also annoyed with a company statement that the cost of the bill would be recouped from them. Market analysts have questioned whether the company is facing further investigation and potential cost due to the issue, although company sources have said it does not.
The superlevy incident appears to have just added to faltering invest or confidence in the company. In recent weeks, a number of Irish institutions have been heavy sellers of the shares, driving the price down.
Margins in Ireland are believed to be under pressure and questions remain about the company Vonkoperation in Holland. Financier Mr Dermot Desmond has been a buyer, picking up 5.82 per cent in the company. Following the superlevy episode, a number of brokers have also downgraded profit forecasts for this year from around £17 million to £12 million or less.
A long running row between Mr O'Mahony and former chairman Mr Denis Wallis has also unsettled investors. While neither man has spoken about the row, it appears to be due in part to the company's policy on milk quotas.
Just a week after news of the £3.1 million fine broke, Mr Wallis tabled a motion of no confidence in Mr O'Mahony at a meeting of Golden Vale Co op, which comprises 70 farmer suppliers to the Cork based company. A motion of confidence was subsequently tabled by a supporter of Mr O'Mahony, and this "was taken first and carried by 42 votes to 18.
Golden Vale has also faced trouble overseas in recent years. Rationalisation costs at its Dutch acquisition, Vonk, were one of the reasons for the 1994 profit warning. It also ran into trouble with its plans to build a £20 million mozzarella plant in Co Tyrone with the US food company Leprino. The proposed venture was eventually postponed last year due to difficulties in getting advance orders.
