Buckingham ordered to pay pounds 3.7m

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The Independent Online
THE FINANCIAL plight of Buckingham International deepened yesterday when the High Court ruled that the hotels and leisure group must honour an earn- out agreement and pay pounds 3.7m to the former owners of World Wide Dryers, which it bought in 1986, writes John Shepherd.

Buckingham's share price dropped from 3p to 2.25p.

John Clark, who took over as chief executive last year, said Buckingham could not afford to meet the payment. 'We will have to consider the grounds for an appeal.'

Buckingham, whose shareholders' funds have collapsed from pounds 113m to just pounds 3m because of the slump in leisure property prices, is also due to have a counter-claim heard in court in the autumn.

The company never provided for the potential loss of the case, other than pounds 450,000 for legal costs. Legal advice was taken from Ashurst Morris Crisp.

World Wide was a distributor of hand-dryers and was bought by the then Leisuretime International from Jeffrey Mitchell and Lewis Holloway. There was a down payment of 250,000 shares, which were trading at around 90p at that time. Mr Mitchell and Mr Holloway retained a 10 per cent stake in World Wide, which was subsequently sold in 1988 to Initial Services, part of BET.

One possible way for Buckingham to pay Mr Mitchell and Mr Holloway is by the issue of shares.