Page 6 - Stakis B Case Study

costs of the Group's own company. This company has the
added incentive of partnership profits where any of the

properties can be beneficially developed without imposing

further investment demands on Stakis.

In June 1991 the Firkins and restaurants were sold for £8

million whilst in August the company closed its only

continental hotel, the El Paraiso in Estepona, keeping it on a
care and maintenance basis. In due course the remaining

25 pubs, five off-licences, five discos and one steakhouse

were sold to Scottish and Newcastle Breweries for £22

million.

Evidence of unrest in the company became manifest when,

in October 1990, four directors attempted to organise a
buy-out of the Leisure division. The move was led by Stuart

Jenkins, the then managing director of the Leisure Division.

The main Stakis board rejected the offer and dismissed the

four directors concerned. The conditions under which
Stuart Jenkins left, with a compensation package, barred

him from discussing the circumstances surrounding the

parting.

In May 1992 the four sacked directors announced the

setting up of a new business, Foreco Ltd, which would

operate in the public house and restaurant sector. The
venture was backed by Scottish banks, venture capital

businesses and Scottish and Newcastle Brewers. The

directors also planned to invest some of the funds they

received in compensation from Stakis.