Signet shares plan under fire

Investor power: Special situations fund flexes its muscles again over restructuring plans for troubled jewellery chain

Signet, the debt-laden former Ratners jewellery business, ran into further problems yesterday when it announced weak trading in the first six months of the year. Its plan to reorganise the company's multi- layered share structure was also dismissed as a "vague generality".

At the company's well-attended annual meeting in London yesterday, a shareholder said the company's UK shops were "disgusting". Another criticised the company for not having a single jewellery retailer on the board, while a third said he did not expect to receive a dividend "in my lifetime".

The questions over-shadowed the company's first steps towards a long- awaited capital reorganisation that will simplify the company's Byzantine share structure. Currently it includes eight classes of preference shareholders and five classes of ordinary shareholders. Chairman James McAdam said he would be seeking soundings from all classes of investor to determine if an agreement could be reached.

His proposals were immediately belittled by rebel shareholders from the UK Active Value Fund, which attempted to engineer a break up of the group in May.

Julian Treger, an adviser to the fund who was not at the meeting, said: "The business under the current management is largely becalmed. The reconstruction of the company is just too slow to realise value to shareholders." He urged the company to be more specific regarding the restructuring rather than "talking in vague generalities".

UK Active Value, which is also advised by Brian Myerson, accounts for 13 per cent of the ordinary shares and pledged to block any proposals that it considered unsuitable. Signet said Mr Treger's comments were expected.

The reorganisation is expected to take "months rather than weeks" but is unlikely to benefit ordinary shareholders, whose stock has plunged from 398p in 1987 to just 14.5p yesterday. Signet still has debts of pounds 349m and owes pounds 98m in unpaid preference dividends, which will have to be met before ordinary shareholders benefit.

The company admits it will not be able to trade its way out of its position. But Mr McAdam yesterday ruled out selling off parts of the UK business - which includes H Samuel and Ernest Jones. This would only create a stronger competitor to the parts that remained, he said.

The company continues to struggle at the trading level. Pre-tax losses for six months to July were down from pounds 26m to pounds 21m, but like-for-like sales in the UK were down 2 per cent and static in the US. Group sales fell from pounds 398m to pounds 344m after some shop closures and the sale of the Salisbury luggage shops.