Sports & Leisure, the sports rights group with links to the boxing promoter Frank Warren, yesterday revealed that it had considered severing its ties with Collins Stewart at the height of the stockbroker's row with its former employee James Middleweek.
The company admitted it had discussed the possibility of appointing an alternative broker after Collins Stewart raised the alarm over the potential damage that the Middleweek affair would do to Sports & Leisure. At the time, the company was engaged in a race against time to raise enough cash to meet a deadline to raise its stake in Mr Warren's boxing promotions business, Sports Network. "Collins Stewart asked us to consider whether it would be appropriate for them to be our broker if perhaps the controversy [surrounding Mr Middleweek] would detract from them raising extra capital for us," Stephen Heath, Sports Network's in-house solicitor, said.
Sports & Leisure, which numbers David Elstein, the former Channel Five boss, among its board members, has since won a two-month extension on its option to raise its holding in Sports Network to 50 per cent. It buoyed its stake to 26 per cent from 22 per cent on Monday at a cost of £1m and plans to make the £6m remaining payment by its new 30 November deadline, hopefully via a mixture of equity and debt.
Although a Sports & Leisure spokesman said yesterday that the company was "very happy" with Collins Stewart, its confession that it had doubted the viability of its relationship with the embattled stockbroker comes as a further blow to Collins Stewart's credibility. "The reality of the situation is that we are back on track with Collins Stewart," Mr Heath added.
Since the row with Mr Middleweek - who made claims of insider trading, share ramping and biased research in a dossier about Collins Stewart - first arose in August, the stockbroker has been seeking to cement the loyalty of its clients. So far only Kuju, a computer games developer, has defected. Collins Stewart is fighting Mr Middleweek's allegations.