The future of the management of Powerscreen International has become more uncertain and market sources believe that a number of senior managers may now come under pressure to resign their positions.
Otherwise, say shareholders, investor confidence will be eroded to such a degree that some institutional shareholders are now talking in terms of requisitioning an extraordinary general meeting to remove the board, if it does not resign.
One institution, which subscribed to last December's controversial placing, said the position of the board is untenable, especially following Friday's revelations that troubles at Matbro were general knowledge in the industry as early as last November.
Informed sources have said that Mr Hubert Watson, appointed on Thursday to the Powerscreen board with responsibility for managing the crisis-stricken Matbro subsidiary, is now seen by many shareholders as taking a central role in the company's future - at least in the interim until the long-term future of Powerscreen can be established.
Meanwhile, The Irish Association of Investment Managers has said that it expects to receive a reply by next Monday from the chairman of Powerscreen International, Mr John Craig, to its request for an urgent meeting to discuss the crisis at the Dungannon engineering group.
The IAIM has sought the meeting with Mr Craig and the board - as opposed to the executive directors - on the basis that it is the board and not the management who have the fiduciary responsibility to shareholders.
Mr McKeown met Irish institutional investors last week at the offices of Goodbody Stockbrokers and received a sympathetic hearing. That, however, was before it emerged that one of Matbro's British competitors, JCB, had circularised its dealers with reports that Matbro was in difficulties.
The IAIM has also voiced its concern about KPMG's involvement in the investigation into the undisclosed losses at Powerscreen's Matbro subsidiary on the basis that, as auditors to Powerscreen, KPMG might be faced with a conflict of interest. It is expected, however, that an outside accountant - Price Waterhouse has been mentioned - will be appointed to carry an independent investigation into the undisclosed losses at Matbro.
Powerscreen shares recovered 19p to 220p sterling in London yesterday, as some investors took the view that, if the rest of the company is in sound financial shape, the shares represent a good recovery bet.
