Ex-MTM bosses face prosecution inyes

The Serious Fraud Office has started criminal proceedings against two former directors of MTM, the Yorkshire chemicals group brought to the brink of collapse two years ago.

The SFO yesterday confirmed it was charging Richard Lines, former chairman and chief executive, and Tom Baxter, former finance director, with false accounting, conspiracy to commit false accounting, and making misleading statements.

Mr Lines, who founded the company in 1979, and Mr Baxter, attended North Allerton police station in Yorkshire. They were bailed to appear at North Allerton magistrate's court on 8 February, 1995. The SFO investigation began in in 1993 after the disclosure of unexpected losses of £20.5m by MTM for the year to December, 1991.

Two profits warnings in March 1992 triggered the resignation of all executive directors, including Mr Lines , 58, and Mr Baxter, 43. MTM's share price fell from 290p to 25p, then to 12p in June 1993 when the company owed its banks £119m.

At that time Ken Schofield, the company doctor, piloted through a divestment and refinancing programme that saw the sale of most of MTM's chemical manufacturing assets in Britain and the US to Manchester-based BTP for £100m. The banks were paid £90m, andconverted the remaining £29m of debt into equity.

The group, now a science and technical holding company, has seen its trading fortunes, cash position, and share price recover markedly since.

It has £16m cash, returned to the black at the interim stage against losses of £12m last time, and resumed dividend payments after a three-year gap. MTM's shares yesterday were 80p, off 2p.

A company spokesman said the SFO proceedings did not relate to current directors, and the group had co-operated fully with the investigators.