No Pain No Gain: A remarkable meeting - for all the wrong reasons

The meeting, I hoped, would give me a better idea whether to stick with the shares, picked up a year ago at 64.5p and now a depressing 6.25p. But I came away baffled and bemused.

Peter Voller, then a 33 per cent shareholder who was ousted last year as chief executive, called the meeting at which he proposed the election of four directors, including stockbroker Geoffrey Hoodless; the removal of three "directors" and the appointment of joint auditors.

But not only did Voller fail to materialise, he did not even bother to vote his shares in favour of the resolutions he had put forward. To add insult to injury, the proposals for new directors were invalid because certain formalities were not completed. Two of the men he wanted voted off were not even directors and one of the suggested joint auditors, a Spanish firm, asked to be excused duty.

Nevertheless the resolutions were voted down. The only valid proposal, the removal of veteran managing director Ray Greenwood, was comfortably defeated.

Voller's antics can only have made life more difficult for Lennox which has had a nightmarish time since its shares were floated on the Alternative Investment Market (AIM) towards the end of 2004.

During its AIM life it has suffered boardroom bust ups as well as a share suspension and a rescue cash call. If that was not enough for frayed nerves along comes the farcical extraordinary general meeting, held at the City office of the company's broker, JM Finn.

But a few shafts of sunlight have emerged. Five days after the meeting, Voller settled a legal row with Lennox. Part of his shareholding, representing some 12 per cent of the capital, has been cancelled.

What a pity shareholders were kept in ignorance of the deal at the meeting. The settlement could explain Voller's strange behaviour in not pursuing his campaign for changes.

It was a year ago, at another meeting at Finn's offices, when "outside" shareholders became aware of the friction. Until then it seemed that Lennox, distributing British products to Spanish retail outlets for holidaymakers and the growing expat community, was an increasingly prosperous business. It planned to expand its Spanish involvement and talked about extending its operations into other European countries. Profits were running at an encouraging level.

Then the fun and games started. Voller lost his job, voted off by a faction seemingly led by David Franks, then a director. The subsequent interim figures were disappointing and then along came the bombshell of a share suspension. The reason? An underpayment of Spanish taxes which, remarkably, was not identified in the flotation process.

To overcome its problems, the group had to raise fresh capital from City investors at a knockdown 10p a share. The new cash was crucial. As the remaining directors, Greenwood and non-executive Nigel Barton, say: "The current management has won the backing of sufficient investors to permit the company to continue to trade".

Well, what's next? A trading statement, not expected to be particularly encouraging, should materialise soon and the two-man board strengthened with the arrival of food man Nigel Terry and accountant Rolf Silver. Then a ' meeting to approve the near £3m rescue package and publication of the yearly report and accounts, followed by another meeting -the AGM.

What about Lennox's position in the portfolio? Obviously last week's meeting failed to produce much guidance. Assuming no more campaigning by former directors the company should soon be back on the uproad.

As for the shares, I have decided to hang on. At 6.25p there does not seem much inclination to sell. After all, City institutions were prepared to pay 10p a share. But it is unwise to expect much share progress.

Don't forget, Voller is probably a weak holder and may sell. Franks, with I think 13 per cent, may also be inclined not to stick around. So there is a significant overhang which could restrain the shares until it is cleared. But with the price not far from the penny dreadful zone Messrs.Voller and Franks may continue to sit tight, thus holding back any recovery strength.