Bank of Ireland to pay for up to 10m Greencore shares

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BANK of Ireland last night agreed to take up almost 10 million surplus shares in Greencore, after the entire 25 million-share government stake was re-placed by J&E Davy, the Dublin broker at the centre of the placing fiasco.

The placing - of a 30.4 per cent government stake in the privatised food company - unravelled spectacularly on Thursday when Davy disclosed that it had breached the company's articles of association.

Sixteen million shares were taken up by institutions in yesterday's re- placing - 2 million fewer than in the original placing. Bank of Ireland will take up the slack, including the stakes parked with companies associated with Davy directors.

The 15 per cent stake limit in Greencore's articles of association was altered to 30 per cent yesterday by the company's board with the permission of the Minister for Agriculture.

The problem arose when Davy bought in shares in Greencore after a deal to place 7 million of the 25 million on offer with SG Warburg was terminated. Davy took back 4.5 million of the shares and Warburg held 2.5 million on the Dublin broker's behalf.

The shares were diverted to companies and an account with Bank of Ireland Private Banking, largely controlled by Brian Davy, chairman of the stockbroking firm, and fellow board members Kyran McLaughlin and Tony Garry.

A pension fund for Davy's executives, a financial services group in which they hold a large stake, and an investment firm controlled by Mr McLaughlin took up some of the 4.5 million shares. Including the 2.5 million with Warburg, Davy's executives controlled nearly 7 million shares, 8.5 per cent of the total equity, valued at Ir pounds 19m when the shares were suspended on Thursday.

Mr McLaughlin said last night: 'We've done nothing wrong, but there was an error of judgement. We are chastened, and in future if an issue is going to flop we'll let it flop.'