Rebels win DTI probe into Emess

TROUBLED lighting firm Emess has confirmed that it is being investigated by the Department of Trade and Industry ahead of a crucial annual meeting next month. The issues behind the meeting will be highlighted in a hard-hitting report this week by independent corporate governance adviser Manifest.

Trade and Industry Secretary Patricia Hewitt's investigation centres on the payment of a special dividend to ordinary shareholders that the firm made two years ago, despite halting payments to preference shareholders. Previous years' losses make Emess legally unable to pay a dividend, though it has a £21m cash pile against a stock market value of £5.4m, based on its ordinary shares.

The company is proposing a financial restructuring so that it can resume paymentsbut the move, to be voted on at the AGM on 1 July, is opposed by a group of rebel preference shareholders.

The Emess Shareholder Action Group has rejected the restructuring plan and proposed replacing most of the board with four of its own supporters. They include former Severn Trent Water chairman John Bellak, who is also chairman of the Aberdeen High Income investment trust, run by Aberdeen Asset Management. Action group founder Peter Calver said the restructuring proposals were not in his members' interest. 'We will continue to fight this,' he said.

Aberdeen is also a preference shareholder in Emess, but is opposed to the rebels and has pledged its 26.5% holding to back the Emess board.

Action group founder Peter Calver said the restructuring proposals were not in his members' interest. 'We will continue to fight this,' he said.