Friday, November 6, 1998 Published at 21:30 GMT
Business: The Company File
LucasVarity's future hangs in the balance
LucasVarity has been the mainstay of the engineering industry
The result of a vote by shareholders in LucasVarity on a controversial attempt to move the automotive parts company's stock market market listing from London to New York has been delayed after protests from opponents of the initiative.
"It's shaping up to be a very close vote indeed," said a spokesman for the group as counting continued.
In a stormy meeting to decide the company's fate shareholders accused the LucasVarity board of "manipulation and greed" amid claims that the decision to go to the US is based on the bigger pay packets executives can expect to receive over there.
The UK engineering firm, which merged with US-based Varity in 1996, says the move will make it easier for the company to raise capital.
But UK shareholders are sceptical of the value of shifting its listing, and individual shareholders are worried that they might lose UK tax privileges if the shares are listed in New York.
The company faces a double hurdle if it is to win shareholder approval for the move at its Extraordinary General Meeting.
First 75% of all shares must be voted in favour. Although half the shares are now owned by US investors, some of the big UK institutional shareholders, including Norwich Union and Legal and General, plan to vote against the move.
Secondly, the company needs to win an outright majority of 50% of those who vote, despite the size of their shareholding. This could give the 18,000 individual investors the power to block the deal.
Gordon Hoar, who retired in 1992 after 30 years at Lucas Aerospace, said, "I'm going to vote against because I don't approve of the whole set up, including the board of directors.
It's a typical example of the tail wagging the dog. Lucas paid good money for Varity and we would have expected it to remain a British company."
Sir Anthony Gill, former chief executive at Lucas which was folded into the enlarged group, said: "We were told it would continue as a British company which would remain in Britain."
Derek Shelton-Smith, who retired in 1989 after 25 years with Lucas Aerospace, said on his way into the meeting, "It's effectively a cheap take over allowed by a weak board."
Old UK company
It is one of the City's top companies, listed in the FTSE 100 index, and its departure from the London stockmarket would mean institutions having to rebalance their portfolios.
Victor Rice, chief executive of LucasVarity, says the plan would put the company on equal footing with its American rivals, and enable the company to underwrite a big share buy-back to boost its value.
But Mr Rice's job could be in jeopardy if LucasVarity loses the vote.
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