Mr Green quit last week when Amber Day disclosed profits of just pounds 7.53m, stripping its chief of his last vestiges of City credibility. In June, Mr Green had indicated profits would be around pounds 10m, itself a blow to earlier hopes of pounds 15m.
The arrangements with Mr Kay caused concern at Amber Day earlier this year. Documentation appeared to be inadequate and Mr Kay was buying shares while building up a debt to Amber Day which at one time approached pounds 1m.
The debt resulted from an agency agreement in which Mr Kay sold videotapes owned by Amber Day and paid the company later. According to David Thompson, Amber Day's new finance director and now acting chairman and chief executive, Intervision still owes Amber Day pounds 400,000, but no provision was felt necessary against last week's profits. The money reflects sales invoiced in July, and will be repaid by 31 October. All money owing on earlier sales of cassettes has been repaid.
Mr Thompson has also moved to clear up confusion over a separate deal, in which Amber Day paid Mr Kay pounds 500,000 for exclusive video distribution rights. 'We have made sure that there are master tapes of the videos available and, where there are not, that the rights are held for the benefit of Amber Day,' he said.
As a result of the profit fall and further below-the-line write-offs, shareholder funds have fallen to pounds 15.5m from pounds 37m two years ago. The shares have tumbled from 129p last November to 35p after a collapse in earnings, constant revision of profit forecasts, and the resignation of several directors unhappy about Mr Green's management style.
One former board member is critical of the continuing role of Samuel Montagu as adviser to Amber Day. But the merchant bank has no plans to resign despite the history of disasters affecting the company and its shareholders, and Mr Thompson says he has no plans to fire it.
'Emperor in new clothes', pages 12-13
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