INTERSERVE, the FTSE 250 support services group chaired by Lord Blackwell, is facing legal action from shareholders in a recently acquired business, including New Star Asset Management, after an accounting scandal in which six senior employees were suspended, The Times has learnt.
MacLellan, which was acquired last month by Interserve under a two-parts cash, one-part shares deal, said that it had instructed lawyers on behalf of its shareholders after the scandal, which Interserve said would reduce net assets by at least £25 million.
Interserve, whose shares were at 375p when it acquired its smaller AIM-listed rival, yesterday tumbled 75p, or 21 per cent, to 281p.
Bob Morton, former chairman of MacLellan Group and now a shareholder in the enlarged Interserve, said: “What we want is an independent investigation into Interserve, and what was apparent at what stage.”
Patrick Evershed, fund manager at New Star and a shareholder in MacLellan, said: “It seems almost inconceivable that the Interserve directors were not aware of what was going on before the end of last week.”
Advertisement
In May, Interserve agreed to pay 116p a share for MacLellan, whose businesses span cleaning, property maintenance and security services, valuing it at £116 million. The shares were delisted from AIM on July 20, the same day that Interserve announced the surprise departure of Stewart Hagerty, the managing director of its industrial services division. MacLellan shareholders received payment for their stock on August 4.
Interserve, whose chairman, Lord Blackwell, is a former adviser to Tony Blair, said that the accounting irregularities within its former industrial service division would result in a £25 million cut in net assets in its interim results.
After suspending six senior employees, it instructed KPMG and Linklaters over the weekend to conduct a forensic review of the company’s books.
In a statement, Interserve, whose work includes public sector contracting, said an internal investigation “suggests that certain control processes within industrial services have been repeatedly circumvented over a period of five or more years”.
Altium Securities, the broker, said the £25 million hit equated to almost 50 per cent of the group’s 2006 pre-tax profit.
Advertisement
Sources close to the group suggested that the inquiry focused on disputed invoices in the former industrial division.
Interserve said that its three other divisions, facilities services, project services and equipment services, are each trading better than expected. The board is confident of the group’s prospects for growth, it said.