Coutts Consulting starts legal action: Company unable to pay any dividends

COUTTS Consulting, the outplacement agency, has reached an impasse with its ex- chief executive Barry Topple, which means the company is unable to pay any dividends.

The dispute, centring on a change in the financial structure of the company, has also prompted Coutts to start legal action claiming damages of pounds 3.4m from Mr Topple.

Huge losses were incurred by Coutts in escaping from a lease on a property at Harbour Exchange in Docklands in London. The losses wiped out distributable reserves from which dividends are legally payable.

Coutts, chaired by Sir Kit McMahon, a non-executive director of Newspaper Publishing, owner of the Independent, does have cash but in the form of undistributable reserves. The company needs support from Mr Topple to change the financial structure of the group and permit dividend payments.

Mr Topple - who left the company last November after the publication of a profits warning - owns 70 per cent of Coutts' preference shares, the key to the proposed changes.

Stephen Johnson, Coutts chief executive, said he had thought the situation had been resolved. Coutts improved the compensation package payable to Mr Topple from pounds 150,000 to pounds 200,000 and the terms of conversion of preference shares after pressure from him. But Mr Topple's approval for the changes has not been forthcoming.

The pounds 3.4m damages claim also relates to Harbour Exchange. Coutts is maintaining that Mr Topple should have been able to reduce the losses the company has incurred.

Harbour Exchange cost pounds 6.4m, which wiped out profits from Coutts' trading operations. Pre-tax losses for the six months to 30 June, published yesterday, totalled pounds 5.2m compared with profits of pounds 930,000 last time. Gearing jumped from 30 per cent to 134 per cent as a result of the losses.