The proposals, meant to assuage shareholders after the board rejected a bid approach worth around pounds 1.1bn from rivals Hays in the summer, were immediately denounced as "pandering to City speculators" by Sir Gerald Elliot, a former chief executive and chairman of the group, who is threatening moves to block the measures.
Shareholders are set to receive an enhanced dividend of 17p a share in February and a further 34p the following month as part of a capital reconstruction. But speaking from Edinburgh, Salvesen's home, Sir Gerald said: "I think this thing is absolutely wrong. This [dividend] is paying out nearly half the company's net asset value and stripping out the company's assets, while effecting a merger which is not operationally sensible.
"It is just pandering to City speculators to make up for the board having not accepted the Hays bid. It is disgraceful and puts the whole question of the board in doubt." But the charges were rejected by Chris Masters, Salvesen's current chief executive, who starts a round of visits to institutional shareholders in Edinburgh today. Announcing a 15 per cent rise in profits to pounds 51.6m for the half-year to September, Mr Masters said this was the first year the business had been correctly positioned since the refocusing of the group started some years ago. "Allowing Aggreko to become an independent business is the culmination of that strategy", while reducing the capital base through the enhanced dividends was in the best interests of shareholders, he claimed. Equity "is a damned sight more expensive than debt", he said, and this move would cut the cost of capital by 1 or 2 percentage points and still allow the business to grow, even if gearing is expected to reach 110 per cent by March.
Sir Gerald, who personally owns 2 per cent of the group and was either chief executive or chairman from 1973 to 1988, said it was "quite likely" he would attempt to form an action group to prevent the plans going through. He also hinted that they could trigger a backlash north of the border.
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