Shareholders angry as Eagle Trust is wound up

After a stormy meeting, shareholders in Eagle Trust, the disgraced conglomerate, yesterday voted overwhelmingly to wind up the company. Andrew Yates reflects on the group's spectacular and turbulent history.

The curtain was drawn on one of the most complicated and controversial corporate disasters ever known yesterday when Eagle Trust appointed liquidators to wind up the company.

Several disgruntled shareholders voiced their displeasure about how David James, the self-styled company doctor, had handled the break-up of the former industrial and television conglomerate over the past eight years.

Eagle Trust's problems started when John Ferriday, the group's former chairman, was found to have stolen pounds 13m from the company, for which he later received a six-year jail sentence. Faced with debts of more than pounds 100m and rising, Mr James was appointed to sort out the group's problems and save it from bankruptcy.

However, just months later Eagle Trust found itself embroiled in the Iraqi supergun scandal. Walter Somers, one of its subsidiaries, was discovered to have manufactured the main barrel for the gun.

Since then more than 20 Eagle Trust businesses have been sold off. However shareholders expressed dissatisfaction at the lack of proceeds that had found their way back to them.

Complaints centred on the flotation of Visual Action, the film equipment hirer, which joined the market in March 1996 with a price tag of pounds 85m, only to be bought by a US rival for pounds 148m within the past few months.

Mr Simons, an Eagle Trust shareholder, launched a prolonged attack on Mr James which lasted more than an hour. "What are you and the board doing by making a present of Visual Action at the expense of us shareholders?" he demanded.

Mr James explained that he had received several offers for Visual Action during 1995, the highest of which was for just pounds 46m. He explained that the group had to sell the business in that year to pay back debts and avoid penalty interest charges. "Only by floating Visual Action could Eagle Trust remove itself from the shadow of insolvency overhanging the group," said Mr James.

Eagle Trust's shares were delisted at 18p, valuing the group at pounds 138m and leaving 31,000 small shareholders with the prospect of losing their whole investment. After numerous restructurings shareholders have received just pounds 7.7m back, equivalent to 1p per ordinary share. The rest of the money raised has gone to pay back bankers, such as Standard Chartered, NatWest and Lloyds, and a large number of creditors.

One shareholder criticised Mr James for his pay packet while supervising Eagle Trust's demise. He denied he had received an excessive salary. "I have received a total of pounds 2.6m in the past eight years. Out of that I have had to fund my own office, secretary, car and pension. After all that the total payment represents less than 1 per cent of the cash recovered and generated over the past eight years," Mr James said.

Mr James now goes on to face another daunting challenge. He has been charged with turning around Sears' beleaguered British Shoe Corporation.