Former Stone Group chief executive James Bird has confirmed he has opted against bidding for Stone Bidco – one of the businesses which CRN exclusively revealed Stone placed into administration last month.
Bird (pictured, left) claims the way the administration process has panned out means he – or any other party – would have had to pay well over the odds for the business. But current Stone chief executive Simon Harbridge disputed the claims and said the process is unfolding in accordance with documents signed by all parties during the 2008 management buyout (MBO).
As CRN revealed in August, Stone Bidco and Stone Topco – the holding companies associated with the MBO – were placed into administration with practitioner Duff & Phelps. A newly created vehicle, Granite One Hundred Holdings Limited, replaced the duo, in a move Stone said was designed to tidy up its "unwieldy" balance sheet.
The main trading company, Stone Computers – the vehicle which deals with customers, staff and suppliers – remains unaffected by the changes, Stone insisted at the time, adding that only a handful of investors were affected.
Following the move, a 45-day window opened in which parties could bid for the Bidco and Topco firms which were put into administration.
Speaking to CRN, former Stone Group chief executive James Bird, who is one of the investors affected by the administration, confirmed he has decided against making an offer.
He said: "[The administration] has been structured in a way that would allow no one to make an offer as the minimum value you would have to achieve to make an offer and beat the pre-pack offer is £35m, which is £7m more than they paid for it.
"The crucial point is the business... is worth no more in the open market than £18m. So what they've done is value it up in order to maintain all their loan notes and interest at parity. So by paying over the odds for it, they will be able to [put] all their loan notes into the new business and not lose any money. The only losers will be me and my colleagues to the tune of £8.6m."
In response to Bird's claims, Harbridge (pictured below) said events had played out in accordance with legal documents signed in 2008.
"The fact of the matter is, there's a pre-agreed order in which loan notes are paid," he said.
"Where James ranks in that, the money you'd have to pay for the company... is £35m. End of. Unless the company sold for £35m or more, where James ranks in the loan notes, he doesn't get any money. Unfortunately, the facts are that it is simply not worth that much. He is saying that himself by not paying that much for the company. His loan notes are worthless. It is not how we have done the administration.
"Whether we are or are not going down the administration route is a total red herring. Those are the legal documents that were signed in 2008 when we did the buyout and he received a substantial amount of money as a result. There's no good complaining about it afterwards."
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