Buyout ends scrap over metal recycler

Published on Saturday 13 March 2010 14:19

A MULTI-MILLION pound Scottish metal recycling firm has been taken over by its managing director following a prolonged legal dispute among its founders' sons.

Fife-based RM Supplies is now under the control of Sandy Robertson, son of co-founder Willie Robertson, after the Court of Session ruled he had the right to buy shares belonging to Thomas and George Muir. They are sons of Thomas Muir, who helped set up the Inverkeithing firm in the 1950s.

Robertson acquired their interests – half of the company's share capital – for 3.3 million. The management buyout was backed by the Bank of Scotland and values the business at 6.6m.

Prior to the MBO, Robertson owned half of the company's share capital, with the Muir brothers each owning a quarter. The deal ends a dispute which has been dragging through the courts since May 2008. The disagreement centred on the Muir brothers withdrawing "management fees" from the company. The two directors were able to outvote Robertson on the board.

But Robertson lodged a petition under section 459 of the Companies Act 1985, arguing the company's affairs had been conducted in a manner that was "unfairly prejudicial" to his interests, and that he should have the right to acquire full control.

The court found in his favour in February last year, and valued the 25 per cent stakes owned by each of the Muirs at 1.653m each. This took into account losses they had incurred on foreign exchange transactions. Prior to these losses, their stakes were worth 2.5m each, valuing the businesses at 10m, Lord Glennie said.

At a hearing in May, it was agreed that all three shareholders should receive remuneration of 365,000 each for total management charges for the five years to the end of January 2009. RM Supplies was ordered to pay the sums to Thomas Muir (Metals) and Thomas Muir (Haulage) – other businesses formed by the Muir brothers' father – on receipt of completed stock transfer forms.

The Muir brothers had lodged an appeal amid fears Robertson could acquire only one of their interests – giving him a 75 per cent majority – and seeking protection from Robertson suing them for the foreign exchange losses and another matter relating to landfill tax.

The court ruled there was no grounds for appeal on the first basis and RM Supplies would have "no enforceable right of action" against the brothers for the forex losses because the valuation of their shares had already taken this into account.

By this stage, Robertson had notched up legal fees of 45,000 and accountancy costs of 35,000, and the dispute raised a "real prospect" of RM Supplies going into administration, because it was at risk of breaching banking covenants with Royal Bank of Scotland.

Lord Hamilton, the Lord President, said the Muir brothers' "actings as directors had been obstructive and in some instances secretive", court papers show.

Robertson said: "The past year has been challenging but we've weathered the downturn well and have strengthened the business in the process. Now we have a new team in place to help deliver our goals."

RM Supplies has since appointed chartered accountants Johnston Carmichael, which represented Robertson during the case, to provide audit, tax and corporate finance services, as well as business advice.

George and Thomas Muir could not be reached for comment last night.