Untying the knot

Mike Foster, the man who ran Inntrepreneur, has presented his evidence in the landmark case. It's a revealing picture of life at the top of a major pubco. Mike Bennett reports Preparing the company for sale We've taken a snap shot of one day's evidence ­ and the key figure is the man who led Inntrepreneur for five years, Mike Foster. The former boss of Courage, to which Inntrepreneur's lessees were tied on beer, took over as chief executive of the pubco in May 1995. In the years immediately before his appointment, major rumblings of discontent were beginning to surface about the way the company conducted its business. Foster: "I was, in 1994, working full time as the chief executive of Courage. My view on Inntrep-reneur was, so to speak, from a distance. It would be right to say that I, from the Courage point of view, had significant concerns about some of the things going on at Inntrepreneur." {Bob Williams, the founding chief executive of Inntrepreneur, had been seconded from the old Grand Metropolitan Estates, the now defunct property arm of the leisure giant, to run the new business in 1988. Williams and his senior executives were widely criticised among tenants' leaders and in the comment page of the Morning Advertiser for being too concerned with making money for their parent company and being insensitive to the needs of individual lessees Foster, however, does not elaborate on precisely what his "significant concerns" were at the time, but during cross-examination makes it clear he was scathing about the previous management's style. When he took over at the helm he tried to establish a better dialogue with lessees, and to get the business, now co-owned by GrandMet and the Foster's brewing group, shipshape with a view to selling by 1998. That year was significant, because it was expected the Office of Fair Trading would at that point order Inntrepreneur to go completely free-of-tie as it had promised its licensees.} Foster: "I came in with an abso-lutely specific brief of preparing the company to be sold within three years. It meant you had to address a series of commercial issues. "We started talking to the tenants. We created regional forums and national forums, and we met tenants, and we listened to them, and people who wrote me letters might even get an answer. So we re-established, as far as we could, communication with the tenants." {A major element of Bernard Crehan's dispute with Inntrep-reneur was the severity of the tie arrangements with Courage ­ paying a market rent and full price for his beer. He claims his landlord reneged on an agreement to allow him, and fellow tied tenants, to go free by 1998. In fact, Foster renegotiated the whole deal with the OFT, claiming that commercial circumstances had changed radically. The OFT, to most people's surprise, agreed with him, though a large number of tenants on specific contracts were freed from the tie. Foster then tried to soften the blow by launching an initiative called Retail Link, which would offer tied lessees a much wider choice, involving services like insurance as well as wet products from the likes of regional and even micro-brewers, and discounts of between £30 and £60 a barrel. They would, however, still be tied to it, and buying out would remain a breach of their contract.} Foster: "We had to address the fact that, yes, we had told people they would be free in 1998. Retail Link came together as a commercial exercise to deal with a set of issues that had to be overcome. Inntrepreneur financially got the tie back for nothing." {Foster admits there were people who did not sign up because "they did not like Inntrepreneur... they were suspicious... felt they should go free of tie." Retail Link was succeeded by the even more broadly-based SupplyLine, which also appeared to placate competition concerns in the European Commission ­ although, states Foster, "it was not designed for Brussels."} Foster: "The objective would be to offer the top three brands in every category ­ standard lager, premium lager, whatever." {The top-performing Inntrep-reneur pubs were then sold to the newly-formed Unique Pub Co, own-ed and financed by the Japanese finance house Nomura. It took over the SupplyLine agreement.}