Claims Direct founders set to make second fortune from Ware-Lane bid

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The founders of Claims Direct have finally closed a deal to sell a large tranche of their shares in the beleaguered personal injury company to Simon Ware-Lane, a self made entrepreneur, for substantially more than they themselves offered for the business only last month.

Tony Sullman and Colin Poole, Claims Direct's former chairman and chief executive who attempted to buy back the company for 10p a share in July, have changed track and yesterday agreed to shed their shareholdings. They will receive 16p a share, or £7.8m, for 25 per cent of the business under the deal with Mr Ware-Lane.

Under complex options arrangements which will be in place for the next three years, the price for a further 35 per cent in the company could go much higher than 16p – to a maximum of 120p a share.

Both prices will kick in only if the company's share price rises above 16p within the next 18 months. The agreement will anger many other shareholders, as Mr Poole and Mr Sullman look set to receive at least 16p for shares which they recently bought back for 10p as part of their own bid for the company.

The price they will receive for their Claims Direct stake will sit particularly badly with shareholders who have lost more than 95 per cent of the value of their holding in Claims Direct since it floated at 180p last July.

Mr Poole defended the deal, saying: "This is a gamble, as we will get practically nothing if the price does not go over 16p. But we believe that there is a future for the company."

The transaction with Mr Ware-Lane ends a period of intense criticism of the stewardship of Mr Sullman and Mr Poole, who have resigned from the company's board having made £60m when Claims Direct floated. They now plan to enter into new business ventures in a completely new field.

Mr Ware-Lane, who The Independent revealed was interested in buying the Sullman-Poole shares last month, already owned 4.5 per cent of Claims Direct and will now control 29.77 per cent. He chose not to buy more of the shares controlled by the company's founders because he did not want to trigger a bid for the whole company.

Instead, Mr Ware-Lane, who has made a personal fortune by taking minority stakes in companies including Fitness First, plans to reverse Claims Direct into another personal injury business, ClaimLine.

He justified his decision to invest heavily in Claims Direct at a time when it has been widely vilified. Mr Ware-Lane said: "Claims Direct has justifiably been criticised and faces many problems, But I believe there is a future in the claims management industry as people are going to keep getting injured."

Claims Direct's shares, which will remain listed on the stock market, rose 38 per cent to 13.5p. City sentiment turned against Mr Sullman and Mr Poole after they presided over Claims Direct when its share price imploded and it was forced to issue three profit warnings. The downturn followed revelations last Autumn that many of the company's successful customers did not receive much of the compensation they were due in personal injury cases because they had to pay for an expensive insurance premium out of their winnings.

A large number of investors will also be upset by other terms of the agreement, which only allows shareholders who took up the Sullman-Poole offer since last Tuesday to unwind the deal and retain ownership of their Claims Direct shares.

Mr Ware-Lane suggested that shareholders who took up the 10p offer two weeks ago should be able to rescind the deal. It was then that Mr Sullman and Mr Poole first confirmed they were in talks with Mr Ware-Lane, but did not give details of what form a deal might take.