Letters reveal chairman was 'upset' with share sale

In the period following the February 2000 sale of Fyffes shares by DCC, there was correspondence between the two companies, the court heard.

In a letter to Mr Neil McCann, the then chairman of Fyffes, in June 2000, Mr Jim Flavin, chief executive of DCC, who had recently resigned from the Fyffes board, said that although he "never felt that my views were properly listened to, or that we were accorded the respect that was due to a board represented significant shareholder, I nonetheless developed an enormous respect for you personally and your commitment to the business."

He said he was saddened that business pressures had led to a deterioration in the relationship between the two men in recent years. "If it is your wish we can draw a line and close a chapter on a 20-year business and personal relationship, but that is certainly not my wish. I would like to resume a good warm relationship and keep in touch from time to time."

On July 5th, Mr McCann responded and thanked Mr Flavin for his warm personal remarks. He said he and his directors had been under a lot of pressure as a result of the events in February and March 2000 (being the DCC share sale, a profit warning issued by Fyffes on March 20th, and the subsequent sharp fall in Fyffes' share price).

"I continue to be surprised and disappointed that you as a champion of good corporate governance did not seek my approval as chairman before proceeding to dispose of DCC's substantial shareholding in Fyffes.

"The perception in the market amongst both small and large investors is that we were aware of and may even have assisted in the process. We have now lost forever many disaffected investors and are suffering the consequences with lack of shareholder confidence and low staff morale."

Mr McCann said he would like to continue his business relationship with Mr Flavin but "I find it difficult at this point".

On June 21st, 2001, Mr Flavin wrote to Mr McCann. On June 29th, Mr Flavin replied. "Dear Neil, I have received your letter of 21st June, and I am surprised at the content and tenor of your last paragraph. I am unaware of there being issues between DCC and Fyffes. You refer to the fact that you have not 'received details or explanations to which we believe we are entitled concerning the sale of DCC block of shares in February 2000'. This is surprising, because I had a very full and frank discussion with you and David [ McCann] in the hotel at the airport the day we sold the first block of our shares in early February 2000."

The letter later continued: "Equally we do not understand your statement: 'In the circumstances you will appreciate we must continue to act in the best interests of the company and its shareholders'."

Mr Flavin said it "seems to us from the brief exchange we have had since that time that you have become somewhat begrudging of the profit earning by DCC and we find this quite inexplicable. Whatever the reason for your upset, I believe it is time to move on. For our part we are very pleased at the improvement you have referred to at the recent a.g.m. which reflects well on the hard and effective work of you and your colleagues."

In a response on August 16th, Mr McCann said it was the case that DCC had been unwilling to give Fyffes details or explanations about the February share sales by DCC. "There is no begrudgery on our part in relation to the profit made by DCC on the sale. The explanations are required in order to protect our shareholders' interests."

He said that as DCC had opted to sell its Fyffes shares without seeking Mr McCann's permission, Mr McCann and his son, David, had been confronted with a fait accompli at the time of the hotel meeting in February 2000. "We decided to act with equanimity."

He said that while "we might prefer to move on, the matter is still under review by the company and its advisers".

On October 22nd, 2001, Arthur Cox solicitors, acting for Fyffes, wrote to DCC in connection with the share sale.

It said the circumstances of the sale were such that there might have been breaches of part 5 of the Companies Act.