WH Smith dithers over rescue plan

Pressure is growing among institutional shareholders for the board of WH Smith to meet with Tim Waterstone and his advisers to discuss his controversial plans to re-invigorate the ailing retailer.

A groundswell of City opinion wants the WH Smith board to provide an evaluation of the waterstone offer. A shareholder said: "Could we not explore how the offer might work?"

The pressure comes following the emergence of Mr Waterstone's masterplan, which conflicts with the version reported by the board of Smith's when it rejected his overtures last week.

A spokesman for WH Smith said the board had no further comment to make about the offer. However, he conceded that, "in the hypothetical event of shareholders asking us to meet Mr Waterstone, we would listen to the shareholders."

WH Smith accused Mr Waterstone and his advisers of trying to enrich themselves at the expense of shareholders. Sources close to Mr Waterstone deny the charge. Among the objections raised by WH Smith was the prospect that a golden circle would get free warrants equal to five per cent of the share capital in the new company.

Chief executive, Richard Handover, who only took up the post on Wednesday, criticised the warrants for "giving away shareholders' rights". The terms of the warrants, however, show they set tough thresholds before they can be cashed in. They would be exercised in four equal tranches, dependent on gains of 20 per cent, 40 per cent, 60 per cent and 80 per cent in the shares of the new company. Ownership of the warrants would be spread between Mr Waterstone, SBC Warburg and, although this has not so far been revealed, the incumbent management.

Under Mr Waterstone's vision for reinvigorating WH Smith, chief executive Richard Handover would stay on as chief operating officer. Mr Handover took the top job following the departure of Bill Cockburn to BT.

Ian Martin, chairman of Unigate, would be appointed to the board as deputy chairman under the current chairman, Jeremy Handley, but in the expectation he would soon rise to be chairman after Mr Handley retires.

Sources close to Mr Waterstone's plans shot down claims that debt would total pounds 1bn. Of the pounds 1bn facility provided by SBC Warburg, pounds 600m would be used to fund the down-payment of a 200p a share offer to existing shareholders.

The remaining pounds 400m would be used as working capital, replacing WH Smith's pounds 350m of debt, and would appear only gradually on the balance sheet.

While that would entail gearing of between 100 per cent and 200 per cent, interest cover would be 3.7 times after earnings before interest, tax and depreciation.

Criticism from WH Smith of the level of fees to be earned by SBC Warburg is also refuted by Mr Waterstone's team. A figure of pounds 34m mentioned by WH Smith, it is said, failed to point out that of this, pounds 20m was a standard banking fee on the debt facility.

Corporate advisory fees would amount to 2.6 per cent of the value of the deal. This would amount to more than pounds 5m, but less than pounds 10m, or at least pounds 4m below WH Smith's figure.

Mr Waterstone was criticised by Mr Handover for his wish to inject his new retail concept, the Daisy and Tom kids chain, into the group. One source asked that if WH Smith was so critical, "why can't they generate higher returns in one of the wealthiest shopping areas in Britain?"

The Banksy image in Folkestone before it was vandalised
Life and Style

Sales of the tablet are set to fall again, say analysts

football West Brom vs Man Utd match report: Blind grabs point, but away form a problem for Van Gaal
Arts and Entertainment
Gotham is coming to UK shores this autumn
tvGotham, episode 2, review
Arts and Entertainment
Bloom Time: Mira Sorvino
tvMira Sorvino on leaving movie roles for 'The Intruders'
First woman: Valentina Tereshkova
peopleNASA guinea pig Kate Greene thinks it might fly
Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister

Met Police confirm there was a 'minor disturbance' and that no-one was arrested

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010

George Lucas criticises the major Hollywood film studios

Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'

Does Chris Grayling realise what a vague concept he is dealing with?

ebooksAn unforgettable anthology of contemporary reportage
Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Life and Style
The charity Sands reports that 11 babies are stillborn everyday in the UK
lifeEleven babies are stillborn every day in the UK, yet no one speaks about this silent tragedy
Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)

Parties threaten resort's image as a family destination

Life and Style
Northern soul mecca the Wigan Casino
fashionGone are the punks, casuals, new romantics, ravers, skaters, crusties. Now all kids look the same
Life and Style

I Am Bread could actually be a challenging and nuanced title

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Salisbury ranked seventh in world’s best tourist cities

The city is home to one of the four surviving copies of the Magna Carta, along with the world’s oldest mechanical clock
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album