Shareholders in Signet, the debt-laden jewellery retailer, voted overwhelmingly against proposals to break up the group at an emergency general meeting in London yesterday.
The meeting had been called by a group of preference shareholders who had been urging the board to seek offers for the various parts of the group such as H Samuel and Ernest Jones.
However, the rebels vowed to fight on. Brian Myerson, an adviser to the UK Active Value Fund, one of the rebel funds, said he would not rule out forcing further meetings if the board did announce more detailed plans to restructure the company.
He added that the views of the American preference shareholders would harden as a result of the defeat.
"The institutions have voted on the understanding the company will seek a re-construction soon. We think this is a one-off support and if we call another meeting we think some institutions will vote differently."
James McAdam, chairman of Signet, would not comment on the prospect of further run-ins with the disgruntled faction. He said the company's first job was to renegotiate its banking facilities, which run out in June, and to keep improving the business.
During the meeting, attended by about 200 shareholders, Mr McAdam had to field several questions from disillusioned shareholders. This included a running dialogue with the rebel shareholders Mr Myerson and Julian Treger, who sat in the front row peppering the board with questions.
One white-haired shareholder, who admitted she was no financial expert, asked whether there was any prospect of the share price improving "before I kick the bucket, so to speak".
Another, who described himself as "a tortured shareholder" who had bought shares at 300p compared with the current price of 14p, said he wondered what had happened to the entrepreneurship that had helped build a £1bn company.
Another criticised the lack of retail expertise on the board. Several admitted their shares were valueless and criticised the board for having no shares in the company.
The board did have some supporters at the meeting, however. Pointing to Mr Myerson and Mr Treger in the front row, one shareholder said: "I'd sooner lose my entire investment than see that lot get anything."
The meeting was marred by a mistake over proxy votes. Mr Treger complained that some shareholders, who had pledged to vote against the board, had not been sent proxy forms. Mr McAdam insisted correct procedures had been followed.
Having defeated the resolution, Mr McAdam will be under increasing pressure from institutions to announce a refinancing package in the next few months. According to some institutional shareholders, he has been saying a restructuring will be announced as soon as the bank negotiations have been concluded. But it is unlikely any package would much benefit ordinary shareholders.
Signet is labouring under debts of £360m and £130m of unpaid dividends on its preference shares. Goldsmiths, the small quoted jewellery group, has offered £250m for Signet's UK businesses.