Smith Barney sparks Sodexho fury

PARIS-BASED contract catering colossus Sodexho Alliance today said it 'reserves the right' to launch a legal action for redress after a research note by Smith Barney triggered a run on the shares that wiped e300m (£207m) off its market capitalisation,

The move came less than a day after the Paris Tribunal of Commerce ordered investment bank Morgan Stanley to pay e30m in damages and interest to French luxury goods group Louis Vuitton Moët Hennessy for publishing 'damaging' research reports. Morgan Stanley is to appeal.

Sodexho said the note 'could lead to the belief that it has not been transparent in its financial communication, particularly as regards its receivables securitisation in the United Kingdom'.

It has asked the AMF, the French financial markets authority, to hold an inquiry. The shares closed down 3.1% yesterday at e24.20 after the note was issued but recovered about three quarters of that loss today. Smith Barney declined to comment.

The company said in a report yesterday that a Sodexho filing with the US Securities and Exchange Commission showed an off-balance sheet debt deal of e82m by Sodexho's UK business which, it claimed, would add 7% to Sodexho's debt.

Sodexho said, however, that the deal had been disclosed in accounts of its subsidiary.