View from City Road: Big names, bigger mistakes

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The Independent Online
NM Rothschild and Smith New Court were suitably contrite yesterday as full details of the Aerostructures Hamble fiasco were released to the world. Pretty miserable reading they made too. 'We're sorry, so very, very sorry' was, in the circumstances, about the only thing the two sponsors to this humdinger of a new issues disaster could say. The promised interim dividend has gone and there probably won't be a final one either. Andy Barr, 'affected by ill health since the beginning of August', has relinquished his position as chief executive without compensation. Floated only last May, the company now faces a 'challenging' period of reconstruction.

The account of what went wrong is the usual catalogue of errors, accidents, misunderstandings and failures in communication. It is the sort of thing you read in official reports on ferry and aircraft accidents. But just because there appear to be reasonable excuses does not mean nobody is culpable. So far we have only had the company's account; it may not be the whole story.

City investors might have been in more forgiving frame of mind had this been an isolated incident. However, Aerostructures is one of eight companies floated in the past year to have issued a profits warning. Many other new issues have bombed too. Aerostructures and MDIS are special, singled out not just by their top-drawer City advisers but also by their celebrity non-executive chairmen - Lord King in the first instance and Ian Hay Davison in the second. It appears that big names are no guarantee against mismanagement. So much for Cadbury.