The Wheway board's acceptance of the McLeod bid after four months of talks did little to calm tempers at the meeting. Hugh Ashton, chairman, had to fend off a series of quick-fire, hostile questions. Despite the bid recommendation, private shareholders focused on severance payments due to past and incumbent Wheway executives.
Wheway disclosed it had borrowings totalling pounds 22m - equivalent to nearly 150 per cent of its net assets. Since the autumn, Wheway has admitted it needed to find a partner to provide financial support. Yesterday the company said talks with rival suitors had proved fruitless. 'Although the offer does not recognise the relative sizes of the two companies in terms of turnover or potential, it does recognise the weak state of Wheway's balance sheet,' Mr Ashton said.
John McGowan, the company's chief executive for 10 years until his departure last November, is set to receive pounds 407,000. He has claimed pounds 280,000 for loss of office, pounds 79,000 pension contributions, pounds 12,500 legal costs and pounds 9,000 a month in consultancy fees until next May.
In November, while talks with McLeod were under way, Mr McGowan was replaced by Brian Long as chief executive. Under the new McLeod management, neither he nor a new finance director, Brian Boswell, is likely to be required.
However, Wheway has promised to pay Mr Long pounds 230,000 if the company is taken over. Mr Boswell has a two-year service contract at pounds 85,000 a year. In all, severance payments could reach pounds 800,000 or more.
One private investor at yesterday's meeting asked Mr Ashton if it was possible 'to question or preferably cancel payments to Mr McGowan in view of the group's lamentable performance while he was in charge'.
Mr Ashton told him that the pay agreements were legally binding. He added that Mr McGowan had not received his full entitlement under the strict terms of his contract.
The McLeod offer takes the form of a one-for-10 share swap, which values each Wheway share at 9.5p and the whole company at pounds 13.3m, with McLeod Russell down 5p at 95p.
Nigel Openshaw, McLeod's chairman, pledged to hold a full review of severance terms in his company's offer document, which said: 'It is not proposed . . . that any payment or other benefits shall be made or given to any director of Wheway as compensation for loss of office.'