Spring Ram is expected to announce that it is looking for a new chief executive after its board meeting tomorrow, at which Stuart Greenwood, finance director, is expected to resign.
The appointment of a chief executive will be an embarrassing climbdown for Mr Rooney. He had hoped to ride out the storm created when he revealed profits of only pounds 26m against earlier expectations, which the group had done nothing to dispel, of more than pounds 40m. The changes mean that Spring Ram will be trying to recruit four new board members, as it has already said it wants to bring in two new non-executive directors.
Spring Ram's City credibility is in tatters. The 1992 profits slump, which a circular said was designed to meet 'increasing expectations for accounting rigour and prudence', came only four months after disclosures of 'serious misrepresentation and false accounting' at its Balterley Bathrooms subsidiary. It now emerges that two Balterley senior executives sold virtually all their shares in Spring Ram some months before the City learned of the problems at the troubled bathrooms offshoot. Terry Smith, former production director, and Brian Robinson, managing director, sold shares worth nearly pounds 800,000 between them.
Mr Smith, who retired three months ago, sold 345,000 shares - leaving him with a minor holding of 12,000 - between June 1991 and November 1992, realising an estimated pounds 456,000. Mr Robinson sold 160,000 shares between October 1991 and May 1992, for some pounds 232,000.
The share sales, which did not require disclosure to the Stock Exchange since neither was a main board director, took place at prices between 110p and 160p. After recent revelations Spring Ram trades at only 67p.
In the wake of the Balterley debacle, Spring Ram fired Terry Henshall, the subsidiary's finance director, whose own options lapsed on his sudden exit.
According to a company spokesman, Mr Smith and Mr Robinson simply exercised options when they fell due, and decided to take profits by selling their shares soon afterwards.
The two men were not alone in large disposals of shares around the same time. Mr Rooney sold 22 million shares, raising over pounds 23m, in June 1991, and his boardroom colleagues Ron Farr and David Riley between them sold 1.4 million shares in April 1992.
In an unusual public move last week, Arthur Andersen, Spring Ram's auditor, dismissed suggestions that it had forced new accounting policies on Mr Rooney at short notice. In the case of Balterley, its accounts strongly suggest that months of work were required before the figures could finally be agreed.Reuse content