F&C faces £14m bill over legal battle

F&C ASSET Management faces a bill of up to £14 million after losing a high court battle in London with two fund managers.

The firm - which has about 130 of its staff based in Edinburgh - had been trying to stop Francois Barthelemy and Anthony Culligan exercising a "put option" that would force F&C to buy their combined 40 per cent stake in the F&C Partners joint venture.

F&C Partners' funds made big losses during the nadir of the financial crisis and is now being wound down.

The court ruling means F&C's total bill for the case is likely to comprise 7.8m to buy the two managers' stakes, F&C's legal bill of 1.7m and "a significant proportion" of the fund managers' legal costs. These costs are yet to be finalised by the courts.

The settlement is above the 2.4m provision that F&C had made, but well below the 40m that lawyers for Barthelemy and Culligan had said the fund firm could face.

The case illustrates some of the pitfalls of mainstream fund managers trying to move into the more lucrative hedge fund market and the difficulties of unwinding such bull-market ventures when conditions change.

Barthelemy and Culligan had argued F&C was content to let F&C Partners wind down after losses in 2008, which saw the F&C Balanced Alpha fund fall 22 per cent and the F&C Select Alpha drop 44 per cent, to avoid having to buy them out.

London-headquartered F&C denied this.