AU: Panel exposes ALG's fuzzy figures

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THE board of the Australian Liquor Group may have known there were "serious deficiencies" in the company's financial accounts at least seven months before it was taken over by retailing giant Coles Myer.

The ALG accounts for the half year to December 31, 2000, were probably "seriously in error", and ALG "appeared to have made a loss instead of the reported profit," the Australian Takeovers Panel said yesterday.

Liquorland, a subsidiary of Coles, had asked the panel on July 12 to look into the circumstances surrounding the takeover of ALG, claiming the financial position of the liquor chain – which owns 35 bottle shops – was worse than it was led to believe.

Australia's largest retailer is believed to be preparing to take legal action against ALG in relation to the disclosure of information before and during the $54 million takeover.

While not making a final ruling, the takeovers panel said if Liquorland's allegations proved true it might seek action against ALG's directors.

"From March to June 2001, the accounting staff of ALG were addressing serious deficiencies in the company's bookkeeping, stocktaking, past accounts and information systems and these problems were brought to the board as early as December 18, 2000," the takeover panel said.

Earlier this month Coles Myer had sought orders from the takeovers panel to reduce the amount of money it paid for the liquor group, claiming it was misled on the financial position of the company.

Coles claims it did not discover the problems until taking control of ALG and when staff informed them that sales were below budget, profits for the half year to December 31, 2000, had been overstated and the company might actually post a loss. Staff also said its accounting systems had not been providing reliable information.

Coles was granted an interim order two weeks ago temporarily halting the $9.4 million in payments to ALG directors who accepted the takeover bid.

However, Coles was ordered to pay shareholders who also accepted the bid, defeating any possible moves by the retailing giant to reduce the $1.20 a share offer.

The panel said it probably would not make orders to halt or reduce the amount of money Coles was required to pay for the acquisition but recommended the retailer take its dispute to the Supreme Court.

Coles ordinary shares closed 5c higher to $6.17 while its discount stock rose 2c to $7.76.

News.com.au

-- Anonymous, August 01, 2001


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