Engineer's shares surge after chiefs quit
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Your support makes all the difference.SHARES in Powerscreen International, the troubled engineering company, surged yesterday after its chief executive and finance director resigned.
Shay McKeown stepped down from his chief executive post yesterday but will remain as a consultant, and Barry Cosgrove, finance director, resigned immediately.
Powerscreen executives have withstood calls for their resignations since "irregularities" in the accounting books of their subsidiary Matbro were announced in January. The group saw approximately pounds 250m wiped from its market value and immediately set aside pounds 47m to cover the gap. A pre-tax loss of pounds 10m is forecast, and share values have nearly halved.
"The board had lost confidence in them [Mr McKeown and Mr Cosgrove] and basically there was board pressure for them to leave," a spokesman for Powerscreen said yesterday.
Analysts said mounting shareholder pressure was behind the moves. The company has been surrounded by allegations that sensitive information was withheld just before a share issue.
Mr Cosgrove has been accused of attending a Matbro sales meeting in December 1997 during which the company's pricing difficulties were discussed. Three million shares were issued on 18 December, six weeks before Powerscreen announced the "irregularities" which sent stock values plummeting. Yesterday the share price surged 40.5p to 136.5p following the announcement.
Colin Fell, an analyst with Dresdner Kleinwort Benson, said: "The fact that somebody could have sat in on a meeting doesn't mean that he knew they were going to lose pounds 46m. From where we stand, there is no way of knowing.
"Clearly, they [the board] have been extremely unhappy but I don't know how much more they can expect."
The departure of Mr McKeown and Mr Cosgrove follows that of Patrick Dooey, sales and marketing director, whose resigned in February.
An investigation by Powerscreen's auditors, KPMG, is expected to be completed within a week. Price Waterhouse has been hired to review the work undertaken by KPMG.
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