Man of grit among the pearls: James McAdam

The reticent Scot who heads Signet, aka Ratners, is squaring up to powerful rebel shareholders. He seems up to the job, writes Paul Rodgers profile

DESPITE a stint in the Royal Navy, Jim McAdam's prominent ears are not pierced. His bulldog neck would redden at the very suggestion of a gold chain. His powder-blue tie, dotted with horses' heads, is held by neither clip nor pin. Not even a wedding band graces his stubby fingers. In short, the boss of Signet, formerly Ratners and still Britain's biggest retail jeweller, is hardly an advertisement for his trade.

The contrast between the glittering business and the reserved businessman is dramatic, and extends far beyond his current position. For much of his career McAdam worked in exotic locations, from Spain via Chile to India and the Philippines. Yet he is not the sort to entertain with lurid tales of bullfights and elephant-back safaris. An intensely private man, he shuns the limelight.

The 64-year-old Scot is particularly uncomfortable with the highly public scrap with dissident preference shareholders that is rapidly coming to a head. Reluctant to be photographed and cautious during interviews, he is none the less fighting his corner tenaciously. It may well be the toughest battle of his long business life.

The rebel shareholders - led by First Boston and Sass Lamle Rubin, two investment houses in the United States, and backed by the UK Active Value Fund - are demanding McAdam examine the possibility of selling all or part of the company, which encompasses H Samuel and Ernest Jones stores in the UK and Sterling in the US. An auction, they argue, would release their remaining value in the 1,500-shop chain. Goldsmiths and Argos have both been tipped as possible bidders. The dissidents concede that McAdam is acting in good faith, but think that his strategy is just plain wrong.

The chairman counters that it would be a fire sale, benefiting only the bankers and possibly some of the preference shareholders, but not the rank and file of ordinary owners. The rebels, he noted, are not long-time investors but recent buyers out to make a quick buck. "The resolution they've put forward is ludicrously unrealistic."

At first glance the complaints of the troublemakers seem easy to dismiss. The two American funds control less than 2 per cent of the votes. All the preference shares together command only 29 per cent. Some analysts argue that the rebellion is just a negotiating ploy designed to put pressure on McAdam ahead of a rationalisation of the company's multi-layer share structure, which he has set as a prime objective of the next year. "I think it's a stirring of the pot," said one analyst. "If they knew they could win the vote, they wouldn't have proposed it."

But after the release of McAdam's defence document last week, the dissidents became even more militant. Julian Treger, an adviser to UK Active, noted that the company's share price rose when the challenge was issued, and fell with the news of the board's recommendation against it. He also moved to woo ordinary shareholders, who hold the key to getting the resolution passed.

"We would recommend to the other preference shareholders that they give up some of the £110m in dividend arrears they will be owed to ensure the ordinary shareholders get a return," Treger said.

The fight comes as Signet begins its long trek back to profitability. The company, then known as Ratners, lost £122m in 1991, the year before McAdam took over. Last year it made an estimated £8m. The results are out next month. Although that is a sharp turnaround, it is still well below the £30m that many analysts had forecast at the beginning of 1994 and the £50m needed to cover annual dividends to preference shareholders. The company owes £360m to its bankers as well as the dividend arrears.

Ratners was one of the high fliers of the 1980s. Its downfall began with heavily geared over-expansion at the peak of the boom, followed during the recession by a sharp downturn in sales that even deep discounting was unable to stop. The infamous confession by the former chairman, Gerald Ratner, that one of his products was "crap", only hastened the decline, and his departure. McAdam was installed as chairman at the beginning of 1992, and presided over the tumultuous year before Ratner was finally forced out as chief executive. He had been recommended by Sir David Alliance, the chairman of Coats Viyella, the world's largest textile conglomerate and the Scotsman's former boss. McAdam was a canny operator with an eye for detail and experience in international retailing, said Sir David. "He was never afraid to take difficult decisions."

Apart from his national service, McAdam spent most of his life at Coats. The son of a forester in Western Scotland, he quit school with a third- year leaving certificate just before the end of the Second World War and moved to Glasgow at 14 to take his first job as an office boy with the company. He used night school to bolster his limited formal education, and rose steadily through the ranks. "J&P Coats had a reputation for training its own people. The main opportunity came when I moved on to the financial side when I was 16. I had to learn everything at the grass roots, going into the mills to get experience."

By 22 he was off on his first foreign posting to Spain, where he met his future wife, Maisie, a young Devon woman who was studying there. Three years later it was on to Portugal, where he spent six months, then to Chile for another seven years. One of the couple's daughters was born in Santiago, and McAdam still has fond memories of taking his family horse- riding in the hills above the city.

The family then moved to India, where cultural differences became more challenging. McAdam had managed to wrap his thick Scottish burr around the Spanish language."We mixed with the local community as much as the expats," he said. "During our four years in Kerala, in tropical south- west India, that was more difficult." The family lived in a company compound in the rainforest, he recalls. "The children rode on elephants, but I didn't."

After his return to Britain in 1970, McAdam helped to restructure Coats Patons, selling its Scottish Woollens shops, and later, as chief executive of the group, led it into the merger with Vantona Viyella.

Since moving to Signet after his retirement in 1991, McAdam has been just as busy. Within a year he had sold Watches of Switzerland for £23.5m, negotiated a standstill agreement with the group's banks and boosted profit margins sharply. In all, a quarter of the company's outlets have been closed or sold in the battle to return it to profitability. Characteristically, he shares much of the credit with his team of managers.

Over the next 12 weeks McAdam will find it harder to hide behind the faade of teamwork. Persuading shareholders to stay with his management will involve personal salesmanship. Whether he likes it or not, McAdam will be the man in the limelight for a while yet.