City: No choice at Ferranti

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The Independent Online
THIS is decision week for 50,000 Ferranti shareholders - either they swallow their pride and accept a paltry 1p a share offer from GEC or see the company go into receivership. Shareholders might still think they have a choice in the matter, but in truth they don't. Some continue to believe they'll get more out of an administration than GEC is offering, but even if this were the case (which is doubtful), it's not actually an option. When the fraud that sunk Ferranti was discovered four years ago, the banks took a floating charge over all the company's assets in return for new money. This gives them the right to call the shots; if GEC is unable to secure Ferranti's debts via a takeover, bankers will call in receivers, not administrators.

I've rarely seen or heard a man more miserable in his task than Eugene Anderson, Ferranti's chairman, as be pleads with angry shareholders to accept the bid knowing he is more likely to fail than succeed; he needs 90 per cent in favour for the thing to go through, a tall order for a company with 48,000 small shareholders. Many of them tell him there's no point in accepting such an insulting offer; if by not doing so they create nuisance value for the banks, who have behaved abominably throughout Ferranti's four-year struggle for survival, it'll be worth it. It's not, however, just their own interests they should be thinking of; it's those of Ferranti's unsecured creditors and employees. If the money is really not worth having, why not do as Mr Anderson suggests - accept and give the proceeds to charity.

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