Caledonian Marts may well be facing the biggest crisis in its 52-year history, but at a special general meeting held on Friday (January 9) it became clear that its shareholder members want to see it continue as an independent business.
The meeting saw more than 350 members packed around the cattle ring to hear board chairman James Cullens explain the circumstances the market faces due to a build-up of almost £4m of hard or impossible to recover debt.
He faced a barrage of questioning, some of it quite hostile, but at the end of the meeting 349 shareholders voted to back a recovery strategy, with only 21 not in favour.
The same number also voted in favour of the rule changes needed to allow the eight-strong board to implement the strategy.
Essentially the strategy, as outlined two weeks ago by letter, is to raise funds through a new form of investor shares.
If insufficient funds are raised then the alternative, or “Plan B” as Mr Cullens called it, would be to sell the market and the 14-acre site on which it sits with the hope that a new owner would allow the market to continue as a tenant.
Mr Cullens yesterday faced the unenviable task of being as open and transparent as possible with the shareholders most of whom are fellow farmers and market consignors while at the same time respecting commercial confidentiality and legal requirements.
Solicitor Frank Doran of Brodies, who has been advising the board of late, had to warn the meeting of the risk of defamation in naming individuals involved in building up the bad debts. It is generally thought that most of the debt has been run up by a handful of buyers over the years, with one more recent debtor owing over £500,000 to the market.
The auditors,who were not represented on the top table, faced criticism from some members for failing to spot a problem that had built up over a number of years.
The board did not escape criticism either, with one member asking if they intended to invest in the business to shore up the finances and, if so, how much.
Mr Cullens said he would not discuss either individuals or sums of money.
He had been asked earlier by Duncan MacGregor, Burnhead, Kilsyth, to say how much was required to make the market an ongoing and safe proposition.
Duncan Henderson, Whitehouse, added: “There is no point in us raising £200,000 if it is to make no difference.”
Mr Cullens replied that obviously £200,000 would not be the figure and, under pressure, suggested “£2m would be a figure to talk about”.
Andy Davison of accountancy firm Ernst & Young, an adviser brought in to help the board through the crisis and to look at debt recovery, said: “There is a need for urgency because we need to know this figure.
“The best way to look at it is that there is £4m due to banks and members. We need to pay that, and if the new funding falls short it will be a case of having discussions with creditors to see what it would take for them to walk away.”
If the right controls and procedures were in place, the business could again be one that broke even or made a small profit.
Mr Cullens had already pointed out that, with market commission of 4% on a £45m turnover, it would be impossible to trade out of the present position.
The site at Millhall was currently being valued if “plan B” turned out to be the preferred option.
Members would within about two weeks have a prospectus prepared by accountants Campbell Dallas, and this would allow members to decide whether to invest.
The bankers, the Royal Bank of Scotland, were being supportive but did not want to “see any inactivity” in sorting out the problems added Mr Cullens.