Court verdict means F&C must make £12m buyout
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The High Court has ruled that F&C must buy out the minority interests of a former fund of hedge fund business in a move that will cost the firm over £12m.
The judgment was announced last week and is likely to mean F&C paying around £7.8m to buy out the 40 per cent share of the business owned by two founder member plus legal costs of around £4.5m.
The ruling focuses on the limited liability partnership which was set up by F&C in 2004 with Francois Barthelemy and Anthony Culligan. F&C was contesting the fact that the two hedge fund managers were right to put in place a number of put options in 2009.
The founding partners argue that F&C wanted to close the LLP, which is 60 per cent owned by F&C, in 2008, only to discover that the individual founder members, who own 20 per cent each, sought an order that F&C Alternative Investment Holdings buy out their minority interest, either at the put option price based on hypothetical profits, or at a price determined by the court under section 996 of the Companies Act 2006.
The court has deemed that the put options were validly exercised by the founder members and that their interests had been unfairly prejudiced with the result that F&C AIH will have to buy out the relevant interests.
F&C has held a £2.4m provision in relation to this matter since 2009.
The company says the individual founders may argue the price of the buyout may exceed £7.8m but the board has been told that scenario is unlikely. The costs are set to be decided at a separate hearing.
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