Fees waived on Havelock shares

INSTITUTIONAL shareholders in Havelock Europa, the troubled shop-fitter, have agreed to waive their underwriting fees for backing a pounds 3m placing launched by the company last week.

The waiver is highly unusual as underwriting fees provide institutional shareholders with a useful additional income at times of fundraising by companies.

Normally a company pays 2 per cent of the proceeds of a share issue in fees. In return, underwriters agree to pick up any new shares not taken up by the market.

However, the practice is under scrutiny by Office of Fair Trading on competition grounds. Some believe that the fee should not be a fixed rate as it prevents competition between underwriters.

Havelock said its underwriters were also its major shareholders, who wanted to save the company's costs. 'There is a close correlation between the underwriters and shareholders. They would have been paying out of one pocket and into the other,' said Guy Stenhouse of Noble Grossart, Havelock's merchant bank.

The institutions, which include M&G, Scottish Amicable and British Gas Pension Fund, had offered to 'do their bit' to cut the costs of the placing, he said.

As a result, Havelock has saved about pounds 60,000 in underwriting fees. In addition, the group persuaded its professional advisers to trim their charges by 10 per cent to a total of pounds 140,000.

Havelock is struggling under pounds 7m of bank debts at a time of tough trading conditions. Last week, it reported a pounds 1.6m taxable loss for the half year to 30 June, compared with a pounds 2.1m deficit last year.