Northern Electric threatens to sue

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Industrial Correspondent

Northern Electric has threatened legal action against one of its US shareholders, Wyser-Pratte, for "untrue and defamatory" allegations about Northern's directors.

The allegations were made in a letter by Guy Wyser-Pratte, president of the US firm, who is pressing Northern to allow a renewed by Trafalgar House after an £11 per share bid lapsed last month.

In response, David Morris, chairman of Northern Electric, said Mr Wyser- Pratte had suggested the directors "have been in breach of their fiduciary duties; that they considered their own interests rather than those of shareholders and that they conducted themselves in a manner you claim may have been fraudulent".

He warned: "Each of the directors reserves all his rights arising out of the allegations. If you repeat the allegations the directors will have little option but to take legal action without further notice."

Mr Morris's letter does not address demands by Wyser-Pratte that Northern should enter into negotiations with Trafalgar House or permit a new bid. The US arbitrageur is mustering support among other shareholders and expects within days to serve an order on Northern forcing the company into an extraordinary general meeting on the issue.

Mr Wyser-Pratte said last night: "I am appalled that the company has failed to respond to our proposals. This response is typical of an entrenched management and some day they will have to face up to the matter squarely. They refused even to speak to Trafalgar House. That is the part which I find unforgivable."