Biermann quits Maddox

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The Independent Online
HUGO BIERMANN, the South African entrepreneur who built up the Vernons pools group, Thomson T- Line, will this morning resign from Maddox Group, the company he has run for the past 18 months.

His departure coincides with a pounds 3m rescue rights issue and the group's decision to change its name to that of its computer maintenance subsidiary, Wakebourne, the only business it still controls.

The rights issue is being made on a one-for-four basis at just 1p a share. This compares with the 8p price at which Maddox shares were issued when it bought Wakebourne in September last year. Maddox shares closed at 3p yesterday.

The rescue rights issue, which was due to be launched yesterday but has been held up while documentation is processed, has been forced on Maddox by the decision to write off pounds 15.1m of bonds received as part payment in a pounds 19.5m buyout of two cables companies, Seacoast and Cables & Flexibles.

The bonds' value was questioned by Maddox's auditors, Ernst & Young, which said there was 'a fundamental uncertainty surrounding the recovery in full of the stated amount'. The auditors are understood to have warned Maddox last July that if there was any problem with the bonds, it would have to write the value down. Mr Biermann, who is not subscribing for his share of the rights issue, said he disagreed with the decision to write off the bonds, even though Cables & Flexibles was placed in receivership in September.

However, the shortage of income from the bonds meant that Maddox was unable to pay its debts. The group was also constrained by an agreement that the management of Wakebourne could buy the company back from Maddox for pounds 2m if Maddox was placed in receivership or administration.

Although Mr Biermann disputed the valuations, he said that his departure was amicable. Maddox has run into trouble with its shareholders after failing to live up to dividend and profit forecasts.