Shareholders lose all in RMJM sell-off
Once worth millions, shares in RMJM have become worthless following the sale of the RMJM Architecture group to the Fraser Morrison-owned Duthus Investments
About 30 former employees, some of whom took out thousands of pounds in loans to buy the shares, have been left with stakes in a non-trading ‘shell company’ effectively worth nothing.
Last week it emerged RMJM chair and owner Morrison was behind investment outfit Duthus Investments, which had snapped up the architecture company for £11 million. The purchase – which was revealed in an email to shareholders – saw £12 million worth of debt written off the troubled practice’s balance sheet and the ties with the minority shareholders broken.
Speaking to The Scotsman, Peter Morrison, Fraser Morrison’s son (pictured above), said: ‘There are around 30 people who are shareholders. But a lot had gone off to start up their own companies and are essentially people who compete with us.’
‘What we are doing is in the best interests of the business.’
Among those shareholders are ex-employees Tony Kettle, now of the Kettle Collective (290,000 shares), Paul Stallan now of Stallan Brand (294,740 shares) and Mark Paterson now at Hassell (75,000). At one point 300,000 shares in RMJM were valued at more than £3million.
One source told the AJ: ‘What has been done is pure venture capitalism. The liquidation of the UK company last year – and now this – has all been by design. The pre-pack process was not set up for companies just to walk away from existing liabilities and allow [the same people] to start afresh.’
‘Yet this is what happened at RMJM and the law allows this. Millions in bad debt including huge sums owed to HMRC are written off.’
Chief executive of RMJM’s Europe business Jonathan French admitted the deal and investment by the Morrison family had been part of a ‘planned process’. He said: ‘Placing the three UK businesses [RMJM, RMJM Scotland and RMJM London] into administration in October 2012 and this recent sale of RMJM Architecture Ltd are certainly part of a planned strategy to strengthen the financial standing of the business.
‘The level of debt that the business had been carrying was unsustainable. These moves are designed to assist the company in its recovery and to allow it to earn its way to profitability this year. Although [these are] early days, we are on target to achieve this.’
Further explaining the deal, group commercial director Declan Thompson said although restructuring had put the group ‘on a more secure financial footing’ the company’s board ‘recognised that the business was still left with a considerable debt burden (in excess of £24 million) which was too onerous to be supported by its current level of activity.’