Grand Met leads in pounds 200m Walker battle

JOHN WILLCOCK

Financial Correspondent

Grand Metropolitan won an important round in its pounds 200m dispute with Brent Walker yesterday when the High Court ruled that the sale of its William Hill and Mecca business to George Walker seven years ago should be re-interpreted.

Brent Walker said yesterday that it would study the judgment and then decide whether to appeal. The dispute centred on a disagreement between George Walker, the former chairman of Brent Walker, and Lord Sheppard, the Grand Met chairman, on the accounting standard used in Grand Met's pounds 685m sale of the betting shop business to Brent Walker in 1989.

Walker maintained that Lord Sheppard had guaranteed at the time of the sale that the business would make profits of pounds 55m in its first year, which it did not.

Grand Met, however, said it had used acquisition accounting to show profits of pounds 58m for the business in the year to September 1989 and Brent Walker should have been aware that William Hill's one-off costs would be charged to profits.

Yesterday the court ruled that the agreement on the sale should be "rectified", a legal term which means that Grand Met is not disputing what the contract says but that the contract does not reflect what it thought it had agreed.

The High Court ruling, said Grand Met, "will ensure that the agreement is interpreted in the same way as both parties intended at the time it was made".

''Arthur Andersen is currently arbitrating on the dispute between the two companies, and the ruling by the High Court forms part of the arbitration process. Grand Met remains confident of the outcome of this arbitration process."

Brent Walker has not yetdecided whether to appeal, but is still keen for the dispute to be cleared up as soon as possible, according to its finance director, John Leach, yesterday.

The dispute began when Brent Walker refused to hand over pounds 50m of the pounds 685m and counter-claimed for up to pounds 200m plus interest. Grand Met took the dispute to court and won. It also won the subsequent appeal.

Grand Met said it did not pursue Brent Walker for payment of the pounds 50m in view of the latter's financial crisis. The Arthur Andersen arbitrator was appointed in 1992, since when George Walker has been ousted from the group and Brent Walker has frequently hovered near bank- ruptcy. Its debts amount to pounds 1.4bn despite disposals.