Holliday breaks with its broker

THE speciality chemicals group, Holliday Chemicals, has sparked a new City controversy by replacing NatWest Securities with Cazenove as its stockbroker.

The change, barely two months after NatWest steered a successful pounds 36m rights issue by Holliday, has sparked murmurs of discontent among its institutional shareholders.

They believe NatWest was removed because it had applied intense pressure on Michael Peagram, Holliday's chairman and chief executive, to drop plans for a convertible loan issue to finance the pounds 52m acquisition of Reckitt Colours International, the pigment maker, last April.

The proposed convertible issue led to an institutional rebellion because some shareholders felt it was designed in such a way as not to dilute Mr Peagram's 20 per cent interest in the company. They also argued that the paper would be highly illiquid and extremely difficult to trade.

It is understood that NatWest chose to side with the City investors, forcing the company into a one-for-four equity cash call instead.

Relations between NatWest and Holliday have also been strained ever since the company shocked the market with a profits warning only a few months after coming to the stock market last year. The flotation was sponsored by NatWest.

Mr Peagram said of the controversial decision: 'As a board we review our advisers regularly. Cazenove has a different style from NatWest and it was willing to take us on, so we decided to make the move.'