Page 92 - Stakis Consolidated Teaching Note

independent divisional performance, which leads to
financial restructuring as and when required. This

included share rights issues and increased borrowings, in

fact in 1986 Reo and Andros bought four million shares at
£1.30, borrowing extensively, to boost the falling share

price. This would also have an effect on the gearing

figure, but it does sound like a desperate measure. The

inflated share price was short lived, with a stock market
crash in 1987.

Andros

Andros was appointed by his father and must have felt he

had a lot to live up to. However, once he had taken over

the CEO role he pursued a programme of opportunistic
growth but failed to devise a means of coping with the

accompanying increase in borrowings reflected in Sir Reo’s

observation of:

“....upward spiralling interest rates, fluctuating
exchange rates and continued economic uncertainty,

so that once more I have to voice a note of caution

about the future.”

Andros immediately re-modelled the board by bringing in
a very large much younger management team. The new

members were not professional managers or experts in

their chosen field, but friends and associates, who
brought the total number of board members to an

incredible forty-seven. The board was of such a size, it

was almost impossible for a democratic decision to be

made, except decisions that were already made, by