Ferranti rebels to fight GEC 1p bid

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The Independent Online
A GROUP of aggrieved Ferranti shareholders is seeking to raise pounds 30,000 to contest the penny-a-share takeover bid for the ailing electronics company by GEC, which values Ferranti at about pounds 10m. GEC will also absorb about pounds 140m of debt as a result of the deal.

The newly formed Ferranti Shareholders Support Association is aiming to get the backing of 10 per cent of shareholders. John Katz, an investment consultant leading the association, believes that it could achieve an effective negotiating position with shareholder support of 5 per cent.

In the offer document for Ferranti, issued yesterday, GEC said it would not proceed with the bid unless 90 per cent of shareholders accepted, allowing GEC to acquire compulsorily any outstanding shares. Mr Katz had asked that GEC limit its holding to allow some shareholders to gain from Ferranti's future recovery.

Meanwhile, Ferranti warned in the document that the only alternative to GEC's bid was receivership and the loss of many thousands of jobs at Ferranti and among its suppliers. The company estimates that up to 4,000 jobs are indirectly at risk in addition to the Ferranti workforce of around 3,000.

Mr Katz attacked the issue of jobs as a 'public relations football' and said that GEC would in any case trim operations and rationalise. In the document, GEC says it will maintain the fullest employment that can be economically justified.

At the same time, it has emerged that under his terms of employment, Eugene Anderson, Ferranti's chairman, stands to gain two years' salary on notice. The prospective payoff, worth almost pounds 1m, is likely to fuel the anger of shareholders. However, GEC has not commented on whether the service contracts of Ferranti directors will be honoured.

The offer document warns shareholders that banks will not continue to lend to Ferranti if the GEC offer fails, and that the company's stark financial position has already damaged its ability to get new business.

It says that Ferranti considered a rights issue as an alternative way out of its problems, but the board concluded that it would need to be too big to be practical. The notion of a 'firesale' of remaining businesses was also considered and rejected.

Mr Anderson has acknowledged that some shareholders are dismayed by the terms of the GEC offer, but repeated yesterday that it was nevertheless vital they accept.