Ex-Hartstone chairman will receive 400,000 pounds

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The Independent Online
STEPHEN BARKER, the deposed chairman of Hartstone, is to receive compensation totalling pounds 400,000 despite being blamed for most of the stricken hosiery and leather goods group's troubles.

The new chairman, Shaun Dowling, said the company was legally bound to honour Mr Barker's contract, although he criticised the former chairman for leading the group to near disaster by making acquisitions that it could not absorb.

Mr Dowling also announced restructuring provisions of pounds 18.7m. These, added to pounds 11.9m of non- recurring costs related to restructuring already completed, sent the group plunging to losses of pounds 9.9m before tax for the year to 31 March.

The news was a further blow to the group's battered credibility. As recently as 3 June, Hartstone forecast profits of at least pounds 8.8m when it issued the last of three profits warnings.

Mr Dowling said the restructuring provisions resulted from the review of the business he had made since becoming chairman a month ago. Closures and disposals will eat up pounds 10.8m, losses on goodwill pounds 1.8m and professional and bank fees connected with the restructuring will cost pounds 6.1m.

The group has been negotiating a standstill agreement with creditor banks and the holders of loan notes since it breached banking covenants in May.

Its net borrowings were pounds 57m at the end of March, or 120 per cent of shareholders' funds. That has since risen to pounds 87m for seasonal reasons. It has also been trying to put off making deferred payments of pounds 8.5m to the vendors of two companies it bought.

Mr Dowling said that under Mr Barker the group had no proper management structure and no proper reporting procedures from the companies it bought.

The shares, 272p at the beginning of March, fell 3p to close at 36p.

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