Patientline, the stricken hospital bedside telephone company, set a date yesterday for an extraordinary meeting after last-minute negotiations with rebel investors led by Shore Capital broke down.
Shore wants one of its directors, Barclays Douglas, to replace Derek Lewis, the former head of the Prison Service, as chairman of Patientline.
The company had identified two other candidates for the job, one of whom Shore was happy with. But the talks foundered because Shore insisted Mr Lewis, who is due to retire in July, should step down immediately. Yet the company was adamant he should stay on the board to lead discussions with the Government aimed at reducing high incoming hospital call charges, in return for the NHS signing up to more of Patientline's other services.
Patientline's non-executive director Ross Graham admitted yesterday the company would lose the shareholder vote if it was held now, but said it hoped to win over major investors such as Merrill Lynch, Invesco and Schroders in the next two weeks. He hopes the board's yet-to-be-named chairman candidate could swing the vote in the company's favour. However, the candidate has stepped aside for now. Mr Graham and the company's other non-executive director, Mair Barnes, said they would resign if the rebel investors succeeded at the meeting on 5 April.
Shore speaks for 17 per cent of Patientline shares and has secured the backing of other investors, amounting to 31 per cent of committed shareholdings. Others have indicated their support in writing on a non-binding basis. The rebels need 50 per cent of shareholders voting to push through their two resolutions, namely ousting Mr Lewis from the board and appointing Mr Douglas as a director. Mr Douglas is credited with the turnaround of struggling businesses such as Sock Shop in the early 1990s.
Graham Shore, of Shore Capital, pointed to the drug developer SkyePharma, which saw a mere 60 per cent level of voting at a recent extraordinary meeting, and saw off a shareholder rebellion. "If SkyePharma is any precedent, we would expect to succeed with these resolutions," he said. Shore's backers include Colin Alton, Patientline's founder and 9.5 per cent shareholder.
Patientline has racked up mounting losses and £90m debts since it floated in 2001 and the shares have plunged 80 per cent. It emerged yesterday Shore had asked Mr Lewis to lead a management buyout in 2004. Mr Shore said: "The company is in a very different circumstance from what it was then."