Balfour Winery founder’s troubles over former hotel group

The founder of Balfour Winery, Richard Balfour-Lynn, and his business partners have been ‘cold shouldered’ by the Takeover Panel and required to potentially pay £33m to investors of a former hotel group.

The case focuses around the MWB Group, which included Hotel du Vin, Malmaison, and Liberty department store, for which Balfour-Lynn was a chief executive until 2012, before the company fell into administration shortly afterwards.

Balfour-Lynn, who founded Balfour Winery but is no longer a shareholder or holds a board position, worked alongside joint-finance director Jagtar Singh and eight other parties at MWB to conceal the extent of their ownership through “a series of sham transactions involving offshore entities’, according to the panel.

Shares

The ruling from the panel, which is the UK’s regulatory body to ensure shareholders are treated fairly during takeover bids, said other directors of the listed group, and the market, were led to believe shares comprising approximately 15% of its share capital were managed or controlled by Audley Capital Advisors.

But in reality they were controlled by Balfour-Lynn and Singh, it found.

As a result, the duo have been ‘cold shouldered’ and sanctioned by the panel for increasing shares beyond 29.9% and not making an offer for the business. The panel also said that there were serious breaches of its code in relation to misleading MWB Group shareholders.

The cold shouldering means that no business regulated by the Financial Conduct Authority can act for them on any transaction which is subject to the Takeover Code. Balfour-Lynn and Singh have been ‘cold shouldered’ for five years.

Payment

The men have now also been ordered alongside business partners to pay approximately £33m plus interest in compensation to those who were shareholders of the group from 12 January 2010.

Balfour-Lynn appealed the compensation payment but his case was dismissed.

The Takeover Panel said: “We therefore remind all regulated firms that they should not deal with the individuals mentioned above, or their principals, on any transactions to which the code applies during the periods stated above.

“We also expect regulated firms to inform all approved persons at their firms that they should not deal with these individuals on such transactions.”

Financial crisis

A spokesman for Balfour-Lynn said the case related to a time when MWB was close to collapse, and directors were battling to save it following the global financial crisis.

The spokesperson told db: “This case concerns events that took place nearly 15 years ago and rules relating to shareholdings in publicly listed companies. In 2009, Richard was focused on trying to save Marylebone Warwick Balfour (MWB), a publicly listed company threatened with failure at the height of the global recession. He left the City soon after to retire in Kent with his family.

“Richard’s efforts saved MWB from imminent collapse in an incredibly challenging financial landscape and helped to protect the livelihoods of its 12,000 employees.

“This case is unrelated to Balfour Wines, a very successful, independent business known for its award-winning English sparkling wine that is run by a young team of talented professionals.”

Omar Faruqui, director general of the panel, said the ruling concluded “the most complex investigation in the panel’s 56-year history” which exposed “their deceit and wrong-doing is testament to the skill and determination of the panel’s enforcement team.”