RMJM risks diluting share value by a third, says ex-boss

A FORMER managing director of embattled architecture firm RMJM has demanded an emergency shareholder meeting to scrutinise plans put forward by chief executive Peter Morrison to inject millions of pounds into the business.

Hugh Mullan, who left the Edinburgh-based practice last summer after six years, hit out at the proposal unveiled last week by Mr Morrison, which would see him plough 8 million of his family's money - in the form of a 5m share issue and a 3m loan - into the company.

But Mr Mullan, who was credited with revolutionising the company's financial organisation during his time at RMJM, claimed the move would significantly dilute employees' shareholdings and would result in "the most fundamental change in ownership since 2002 in favour of the Morrison family".

He called for Mr Morrison - whose father, Sir Fraser, holds a majority stake in the business - to make the company's finances transparent to everyone.

The company, which was behind the design of the Scottish Parliament building and until recently counted Sir Fred Goodwin among its staff - was hit hard in the recession and has suffered the loss of a large number of global employees in recent months, amid claims of unpaid wages and contractor bills.

In an e-mail to Mr Morrison, Mr Mullan, who started out at RMJM as financial director in 2004, before being promoted to MD of its European business, warned that employee shareholders would see their stake drop in value by almost a third.

It is thought that when the Morrisons bought the business in 2002, Sir Fraser took a 56.4 per cent stake - with the rest owned by staff.

"Perhaps the best way of allaying the concerns of shareholders is to hold a general meeting where you can present the current health or otherwise of the firm," wrote Mr Mullan. He added that he believed the proposed share issue price of 46p a share represented a "substantial discount" on the true value.

"I think this would be especially pertinent when considering the last AGM was held at least three years ago," he added.

Mr Mullan said shareholders should be able to see the company's order book - which Morrison recently claimed had returned to pre-recession levels - and be shown proof the proposed cash injection would be sufficient to allow the firm to trade through its difficulties.

He also said the latest set of accounts for the year to April 2009 - due to be lodged with Companies House some months ago - should be made available to shareholders, alongside management accounts for the current year, forecasts for "at least" the following 12-month period and information on the new debt facility the company recently announced had been agreed with its bank.RMJM director Nick Haston said: "As an independent director, I firmly believe this proposal is in the best interests of the company, of shareholders and of staff.

"The proposed injection of capital by the Morrison family is a significant and tangible vote of confidence in the business and is to be welcomed.

"It will bring stability to the business as we continue to emerge from a challenging period. Other shareholders can, of course, maintain their positions by investing in the future of the business as the Morrison family has pledged to do."

Meanwhile, it emerged yesterday that RMJM has dropped its support for the much-publicised Architecture for Everyone - a partnership with the Stephen Lawrence Charitable Trust - which aims to encourage young people in ethnic minority groups to study architecture.

The company said it had been forced to abandon its support of the charity in view of the "current economic situation". A spokesman for the trust said he was disappointed to lose RMJM's sponsorship.