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16/10/16
05:46
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Originally posted by walkingeagle
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Nick - I wasn't commenting wearing a WTG hat. I don't have a huge amount in it - I only reinvested part of the big cash payout. And I don't believe anything significant will come of the warranty claims now made. The short term effect on WTG's price doesn't bother me, but the moves will probably delay the special dividend, or even reduce it if WTG decides to throw AG a bit of a lifeline to save further hassle.
What irked me is that SGH is trying this now, because it won't do it any good at all if, as I suspect will be the case, the claims largely don't succeed. The share price will take another hit and damage BH's credibility this time, because he must have given his blessing to this attempt at money. I've got a bigger stake in SGH than I have in WTG.
None of us knows the full truth about how much AG knew, or even what the claims are about, but it's logical to assume that with everything so much in the air at the time the deal completed, any warranty clauses were going to be very tightly drawn. It's difficult enough to claim under these type of agreement anyway. Just look at the time that passed before anyone in SGH started flagging up issues. A natural defence might be:"hang on a minute, how come it all seemed to be working ok until what we'd sold to you flowed through (except NIHL claims which were handled separately), then all of a sudden your income dried up? How about it's your own fault for not being able to run the thing properly from day 1? You did what immediately? Oh - changed a lot of the names everyone knew? I see - so you threw goodwill out of the window?" I could go on.
I trust my judgement on what's most likely to have happened, based on similar behaviour I have seen (professionally) in the past. People are slow to accept blame where it's due; they hang grimly on for status and money. This further damages businesses where acquisitions haven't worked out well because full focus on the future is what's needed, not futile attempts to justify the past. I can't tell you how many business leaders I have known over the years who've adopted the philosophy: "never explain; never apologise". I'm not among them and I don't respect those that are.
all imo/dyor
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The likes of Olswangs don't pursue unmeritious claims. The fact that they have intimated a claim will be because SGH have had advice that there is in fact a case to answer for breach of warranty. A lawyers lot is to be sword and shield. The Bucks Olswangs with be charging will not be insignificant.