Guinness Peat in fear of £3m bill

GUINNESS Peat Group could face a big bill for its takeover of roadside recovery firm Nationwide Accident Repair Service (NARS). The investment company, which completed the deal with NARS this year, could be forced to pay £3m to two sacked directors.

Investors in NARS have already had their final dividend cancelled after the merger because of the cost of laying off staff. Its annual general meeting on Monday will be the last before it is delisted and some shareholders are likely to express anger over their lost dividend and the way in which the recent deals have been handled.

Guinness Peat, led by chairman Sir Ron Brierley and executive director Blake Nixon, faces the possible payout because of a legal claim by directors of one of its subsidiary companies, International Motor Parts, bought by NARS in 2000 but sold to Unipart last summer.

Key directors Jan Drozdz, who foundedthe motor parts company in 1993, and Jonathan Paul claim that under the terms of the sale they were offered a five-year contract with NARS, with their pay linked to the company's performance.

They say they were also legally bound to keep working for the business for at least two years after the sale. Despite this lock-in, Drozdz and Paul were given only a few hours' notice that most of the company was being sold to Unipart. The two directors lost their jobs six months later.

An employment tribunal reviewed the case last month to decide whether the directors' jobs were protected under the Transfer of Undertaking and Protection of Employment rules (TUPE), designed to protect staff during a takeover. The tribunal is due to deliver its verdict in a few months.

If the tribunal decides Drozdz and Paul's contracts are covered by TUPE, the £3m cost of sacking the directors will fall to Unipart, which bought the company. If not, Guinness Peat, as owner of the original parent business, will have to pick up the bill.

A spokesman for Guinness Peat said: 'We are aware of the case, but we do not expect to face any liability. Until we know the outcome of the current ruling, we're boxing shadows.' Unipart declined to comment.