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Media Square Shareholder Accuses Board
Following last week's management buyout (MBO) of UK marcoms group Media Square - the parent of market research agency Illuminas - former shareholder Bob Morton has accused the firm's Board of Directors of breaching its fiduciary duties.
Media Square went into administration last Thursday, after its bank refused further funding to pay off debts of £26m. The company's shares were suspended from the AIM exchange in the morning and by the afternoon, the MBO had been made through a new employee-owned firm called MSQ Partners. While all creditors were paid, the transaction did not result in a return to shareholders.
Morton, whose firm Hawk Investment Holdings had held a stake in the business, has now made a complaint against the firm's administrator PricewaterhouseCoopers (PwC), claiming that it rushed through the sale of the business to former Media Square CEO Peter Reid and Chairman Roger Parry, undervaluing it in the process.
In its defence, PwC said that a fast turnaround sale was necessary because it did not believe there would be any interest from other potential buyers.
Morton says the sale had 'zero transparency' and comments: 'The whole nub of it is that the management have done this deal on behalf of themselves and not on behalf of shareholders, resulting in the bank losing £12m in a write-off. Why wasn't that done for the benefit of the shareholders?'
Web site: www.msqpartners.com .
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