Preference holders revolt at Ratners

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ANGRY preference shareholders of Ratners are threatening to call an extraordinary general meeting to press their case for a capital reconstruction.

Jim Jenkins, managing director of First Boston Corp, the New York investment bank, hit out at Ratners, accusing the company of ignoring the interests of holders of dollars 500m ( pounds 333m) preference shares.

'They've just completed a reconstruction of the senior debt with their banks. But they've still not done a damned thing about the rest of their capital structure,' he told the Independent on Sunday.

'I have told Mr McAdam (Jim McAdam, chairman of Ratners) that it is like he's continuously taking a stick and poking us in the eye with it. He's just ignoring dollars 500m of capital.' He said preference shareholders had the right to call a special meeting to make proposals, including appointing sympathetic directors. 'That is something we can do. We have been considering it.'

He added he might also attend the Ratners annual meeting, which is scheduled for early September. He caused a sensation at the last meeting, publicly accusing the board of paying themselves 'egregious and appalling' salaries. Gerald Ratner, then chief executive, resigned soon after.

Mr McAdam responded last week: 'I do not think these are issues that a public company should debate publicly. We are acting in the interests of all shareholders, including preference shareholders.'

He refused to be drawn on the possibility of a reconstruction: 'We have to get the trading business into the black. From that all else will flow.' Last week, Ratners announced a pounds 40m loss and plans to close 54 more shops and to change its tarnished name to Signet. It also reported it had renegotiated its pounds 400m of senior debt for two more years.

First Boston is a Ratners preference shareholder in its own right, and was also a joint issuer of the shares with Goldman Sachs. Both are facing legal action from unhappy customers.

Ratners suspended dividend payments to preference shareholders 18 months ago. At the 30 January year-end, it owed pounds 36m of unpaid dividends.

Despite his irritation over the treatment of preference shareholders, Mr Jenkins applauded the reforms within the business.

The preference shareholders currently have 23 per cent of the voting rights of the enlarged capital. The shares are trading at about 30 per cent of face value.

Ratners teeters, page 6

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