Thursday 12 December 2019

Lynch enemies made very late moves in saga

So who pulled the trigger and why? Almost a week has passed since Philip Lynch departed One51, but shareholders haven't been told why his term of office had to "cease".

Yes, the share price is disastrously underperforming. At just 90 cent, it is down a horrific 70pc in two years, leaving co-op shareholders incensed.

But only last year, board and shareholders were prepared to back Lynch at a make-or-break AGM and, more recently, lenders put in place a new €200m debt package for the company, a move seen as an endorsement of the Lynch strategy.

Nobody has claimed Lynch alone is the reason for share price collapse. In fact, Irish brokers claimed only last year that the break-up value of One51 meant the "true" value of the stock was apparently €4.20 a share. Unfortunately, the company is not being broken up.

No results have been released for 2010 and an up-to-date divisional breakdown of the business is not available as a result, triggering great trepidation among disillusioned shareholders.

Problems for Lynch with AIB and a probe of his share dealings in C&C couldn't have come at a worse time for him.

One51 is a business with rag-bag diversity. To some, Lynch threw money at acquisitions like someone attending a ticker-tape parade, but even One51 bulls (yes, there are some) admit the lack of coherence in the business remains a problem. When the business makes losses they tend to be big. Witness last year's crippling writedown of more than €30m on Augean PLC, appropriately enough a UK hazardous waste company.

This transformed pre-tax profits of €19.4m into losses of €10.9m, leaving Lynch backpedalling.

With no net profits, no dividends and no capital growth, Lynch was left with little defence.

This all happened last year but curiously, his detractors only appear to have woken up to this gloomy picture now, which makes one wonder did other external factors play a part in the final moves against Lynch?

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