Rebel threat to Interflora

Board faces opposition over conversion to plc status
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More than 400 rebel florists are seeking to throw out Interflora's entire board of directors over plans to convert to limited company status and possibly float the business on the Stock Exchange.

The dissidents gathered enough signatures to force Interflora to hold a special vote, which will take place in Coventry on 11 May at the first EGM ever called by members in Interflora's 74-year history.

"There have been reports of somebody stalking us or a group of City investors looking at us, but nobody has approached us," said Kevin Lannigan, Interflora's head of marketing.

The Interflora dissidents, led by Leeds florist Beverley Wood, are also furious over a proposed six-fold increase in the annual membership fee to pounds 1,750, according to Alyson McGowan, a Bradford solicitor employed by Ms Wood.

"Interflora is a trade association set up for the benefit of its members and it's not in their interest to convert to plc status," said Ms McGowan. "Members are worried about subscriptions and deposits going up."

"The board believes converting to plc status is a good idea," countered Mr Lannigan. "Members would get shares - an asset they could sell when they retire from being florists - as well as dividends."

Interflora would also be able to raise money from outside sources to help turn the company into what Mr Lannigan called "a much bigger, more commercial enterprise".

"Flotation would be a long way off, since there are complex legal and tax matters to be sorted out," said Mr Lannigan.

The board is set to release its plc recommendations at Interflora's annual meeting in October, a move that would be stymied if the rebels succeed on 11 May.

They need a simple majority of those voting at the meeting to sack the directors - who include Interflora's managing director, former Grand Metropolitan executive Douglas McGrath - and install their own six representatives. Last year, only 600 of the 2,700 Interflora members attended the annual meeting.

Even if Interflora members, who two years ago asked the board to look at demutualisation, finally vote for adopting plc status, it is not certain that the organisation will finally be floated on the stock market.

Valuing the business is tricky. In the year to May 1996 Interflora, which employs 200 staff at its Lincolnshire HQ, showed a deficit of pounds 140,000 on income of pounds 11.9m. The money comes from annual fees paid by florists and a percentage of the pounds 2.99 transaction charge on each flower order put through the system.

But if the value of flowers ordered is included, the turnover is nearer pounds 100m and the profits much larger. According to Mr Lannigan, the Inland Revenue could require Interflora to include these larger amounts in valuing its business and impose a heavy tax bill on changing to plc status.

This week, Interflora is set to clarify its proposals on membership charges to pacify smaller florist firms. Mr McGrath wants to boost the annual fee but cut transaction charges in a move that, Mr Lannigan admitted, will make larger florists "commercially better off".

However, Interflora promises to reveal changes designed to ensure that smaller firms are no worse off.