Suit over McBride buy-in

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The Independent Online
LEGAL & General, the insurance group, and McBride, the toiletries maker being groomed for a pounds 300m flotation next month, are being sued for more than pounds 4m by a consultant who advised on the management buy-in of McBride from British Petroleum in 1993, writes Patrick Hosking.

New shareholders are thought to be minimally exposed because the company has already made a provision in its 1994 accounts, and other defendants to the action would share any pain.

However, in addition to the pounds 1m cash claim, the plaintiff is also demanding 1 per cent of the share capital of McBride - worth between pounds 3m and pounds 3.5m if the float goes smoothly - plus interest and costs.

Scant details of the dispute are contained in the McBride pathfinder prospectus, which refers to an unnamed "corporate consultant and connected individual" who has issued a claim.

McBride, advised by the lawyers Ashurst Morris Crisp, said it had "a strong defence" to the claim. It said it was unlikely there would be a material adverse effect on the company.

At the time of the buy-in of McBride, the company gave an indemnity to L&G Ventures, the arm of L&G which organised the deal, against liabilities that might arise as a result of the dispute.

That indemnity remains in respect of the McBride chief executive Mike Handley, but has otherwise been cancelled. Instead the company has agreed to share liability for the claim.