Sugar faces defeat in buyout plan for Amstrad

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The Independent Online
ALAN SUGAR'S controversial proposal to take private Amstrad, the consumer electronics group he founded, was heading for defeat as the number of votes cast against the plan continued to mount last night.

The company is today expected to disclose the final count of proxies ahead of tomorrow's shareholders' meeting. There is a growing belief the proposals will be defeated by a convincing margin.

A spokesman said: 'The dice look stacked against us and, short of a last-minute change, the proposal faces defeat.'

Amstrad shares closed 1p higher at 25p yesterday.

In anticipation of the result, Amstrad yesterday announced that it would appoint two non-executive directors to its board. The posts are to be advertised later this week and a final shortlist of candidates will be drawn up by Pro-Ned, an independent body supported by institutional investors that specialises in finding non-executive directors.

The move follows persistent criticism from shareholders who say that Amstrad's board is dominated by Mr Sugar, its chairman and 35 per cent owner.

The company does not have any non-executive directors - one of the factors that led to the rejection of Mr Sugar's proposal by shareholders.

Although the company was advised by Kleinwort Benson, the merchant bank, and Touche Ross, its auditor, many investors felt that they were given insufficient independent advice on the deal.

Under the terms of the proposal, Mr Sugar offered 30p each to buy out the remaining shares he did not own, for a total of pounds 113m. But the company's net assets were valued at about 46p a share.

He has been fighting a losing battle due to growing opposition from small shareholders and institutional investors.

Prudential and Standard Life, the insurance giants, and Postel, the pension fund, have already declared their opposition and are likely to be followed by other large shareholders. The buyout requires approval from investors at a court hearing and a shareholders' meeting in the City tomorrow.

Last week Amstrad revealed that the tide of opposition was running against Mr Sugar. A total of 34.1 million shares and 3,932 shareholders had voted in favour of the proposals compared with 32.8 million shares and 5,511 shareholders against.

The majority of shareholders voting against the offer at the court hearing would be enough to block the buyout. Amstrad has 581 million shares in issue and 31,500 shareholders. Mr Sugar is not allowed to vote in the buyout.

However, a spokesman said that Mr Sugar would continue to work at the group even if his plans were rejected. 'He will not up sticks and go but feels that he has discharged his duties to shareholders with the buyout. However, if someone offers to buy his stake he may decide to sell.'