Medway dockers claim they were cheated out of pounds 10m

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The Independent Online
MORE than 300 dockers forced out by Medway Ports after an industrial dispute last December say they have been cheated out of nearly pounds 10m of potential profits from the sale of the group. They are taking legal advice on whether they can sue the company and its advisers, KPMG Peat Marwick, as they claim they were obliged to sell their shares at a derisory price two months ago, so losing a potential profit of up to pounds 160,000 each.

Medway, which owns the Chatham and Sheerness docks, announced on Friday that it was in talks with the Mersey Docks and Harbour Company about a takeover that could value it at more than pounds 100m. A bid battle is brewing, with Forth Ports and Powell Duffryn also interested in Medway, which had hoped to float on the stock market next year.

The group was sold to a management and employees buyout in July last year for just pounds 37m. The potential sale has caused a row in Parliament, with Joan Whalley, Labour spokeswoman for Transport, describing the MBO team's prospective profit on the sale as disgraceful.

If the bid goes through, the 2 million shares in Medway, half of which are held by management and employees and half by City institutions, could be worth pounds 35 each, compared with just pounds 1 at the buyout. The four-man management team is set to make more than pounds 9m, of which pounds 4m will go to Peter Vincent, the group's chief executive.

In June, Medway forced 309 dockers, who had resigned from the group in December amidst after a dispute over new working practices, to sell back their shares to the company at 250p each. A total of 300,000 shares were bought back by the company and sold to other employees and institutions.

The price was determined by KPMG Peat Marwick, which advised Medway's management in the buyout. KPMG produced a report for the buyout's backers, Charterhouse and NM Rothschild, before the purchase last year, recommending large cuts in the workforce.

Mr Vincent would not confirm the pounds 35-a-year valuation but admitted the sale price would be substantially more than 250p a share. He is reported to have told employees recently that it would be at least pounds 25 a share.

Mr Vincent said the dockers who had left the company were forced to sell, because the articles of association stipulated that the shares were for employees only. 'We gave them a handsome profit on the shares, even though they tried to bring down the company.'

The secret report produced by KPMG in February last year, a copy of which has been seen by the Independent on Sunday, discusses large-scale cuts in the workforce and changes in working practices. It says: 'The management team see many positive benefits in a strike situation allowing, as it would, the opportunity to replace the current highly paid dock worker with cheaper labour'.

(Photograph omitted)