A statement was issued by Pyrrho today in response to recent press articles suggesting that it was in some way responsible for putting MWB into administration. Pyrrho, which claims to have suffered "significant losses" as a result of the administration, categorically denies any responsibility in the collapse of MWB.
Deloitte was called in as the administrator of MWB Group on 16 November after the shares in the company were suspended two weeks earlier. The share suspension related to an outstanding loan of £8m, which the group owed to its subsidiary service office company MWB Business Exchange.
Meanwhile MWB Business Exchange also owed its parent company £4.8m in contractual payments, which were due to be paid between September this year and February 2013. It had been proposed that the remaining monthly payments were offset against the inter-company loan. However the MWB Group had relied on the regular payments from MWB Exchange to meet its liabilities, a situation that led to the administration.
In its statement Pyrrho said that the intercompany cash flows between MWB and Business Exchange did not make commercial sense and were not in the interests of Business Exchange or its minority shareholders. As a shareholder, Pyrrho said at no point had it agreed to "the accounting treatment of the inter-company flows by either MWB or Business Exchange".
It went on to say that since MWB's share placing in January 2010, Pyrrho "has repeatedly questioned the actions of the directors of MWB and corporate actions taken by the company" and believes "the poor corporate governance, the conflict of interest and serious strategic errors of the board of MWB since the January 2010 placing" led to the eventual administration.
The day-to-day operation of Malmaison and Hotel du Vin is not affected by the administration of MWB. Chief executive Gary Davis has said that it is business as usual for the two brands, whose sales and profits were ahead 14% over the last four-month period on a like-for-like basis.
Richard Balfour-Lynn, who was chief executive of MWB Group at the time of the company's share placing in January 2010, responded to the statement from Pyrrho, by saying:
"I note Pyrrho's latest public salvo in its campaign against the former MWB board. The matters have been raised before, albeit misguidedly, and the board has responded accordingly each time. Suffice to say that, as Pyrrho well knows, all decisions during my time at the helm were taken by the full board, subject to a unanimous vote, with the benefit of independent external advice and in the interests of all shareholders equally."
Balfour-Lynn resigned as chief executive of MWB in March 2012.
By Janet Harmer
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