OPINION:THINGS ARE starting to warm up at Irish Continental Group (ICG) as the clock ticks down on the 12-month moratorium on bids imposed by the takeover panel, writes John McManus

The presumption until now was that not withstanding the current state of the market one or other of the three potential suitors would try and unlock the stalemate next month. The most likely outcome was seen as Moonduster, the consortium led by Philip Lynch's One51 group, which owns 25 per cent, or Aella, the management consortium which owns 16 per cent, buying Liam Carroll's 29.8 per cent stake with a view to having another go at taking control.

Events in recent weeks have now put that particular scenario in doubt. Very serious allegations have been made against Moonduster to the takeover panel. The allegation is that Moonduster last year entered into an agreement with another shareholder, the London-based Arkaga fund, which would constitute a concert party. Arkaga is alleged to have acted as an agent for Moonduster, buying a 5.17 per cent stake in ICG as it jockeyed for position with Aella with a view to making a bid. In the end Moonduster did not bid as it was clear its offer would not succeed after Carroll got involved.

If the takeover panel decides there was a concert party then the consequences for Moonduster are very serious.

Because the combined Moonduster and Arkaga stakes exceed the 30 per cent threshold, Moonduster could be obliged to make a bid for the company at in excess of €24 per share, the level at which it bought shares in the abortive takeover attempt last year.

This is a far from attractive proposition given that the shares are currently down around €15.

Alternatively Moonduster could be forced to sell down its entire shareholding, which would leave it with substantial losses.

That, however, could be only the start of its problems as it could face litigation from shareholders who feel they lost money because of the alleged concert party.

Finally, there is the Office of the Director of Corporate Enforcement, which no doubt would be obliged to investigate such activity.

It is extremely serious stuff and not surprisingly Moonduster has made it clear that it will do what it must to protect its reputation and is co-operating with the panel.

The allegations - which are spurious according to Moonduster - have emerged into the public domain from two corners.

The first was a letter sent by Kevin Beary of Dolmen Corporate Finance to the panel in which he told of a conversation he had with David Hayes, a former Arkaga director in which he claimed an arrangement between Moonduster and Arkaga was detailed along with plans for what would happen to ICG post the takeover.

The gist of these plans was to divert traffic from Dublin to other ports owned by investors in Moonduster such as One51 and Doyle Shipping, and in the long term develop the ICG landbank in Dublin Port.

Beary, who had acted for Liam Carroll in his share purchases, took the view that the information was so serious that he had no choice but to tell the panel, which he did along with disclosing his connection to Carroll.

Hayes has subsequently told the panel that the conversation took place in the course of a job interview and that it was not open to the interpretation that Beary may have put on it.

The panel members will have to decide which, if either, version of what happened is correct in deciding what course to take.

But they will no doubt be mindful of the other elements of the story which emerged in recent weeks.

It has been reported in this paper that Arkaga has commenced legal proceedings against Moonduster on the basis of the alleged agreement between them, which involved a commitment to make good any losses they might incur. These are quite significant given that Arkaga bought shares above €24, with a figure of €11.8 million reported.

At first glance this seems counterintuitive, because if any such agreement existed why would Arkaga want it to enter the public domain, with the obvious consequences that have come to pass; namely the involvement of the panel?

The logical presumption would be that this is because Arkaga - which has made no public comment - is of the view that the agreement does not constitute a concert party arrangement.

Market sources counter that it is not really an issue for Arkaga whether the agreement constituted a concert party or not. The obligation to declare any such party and act accordingly - make a bid essentially - rests with Moonduster.

As things stand Arkaga's main obligation is to look after its investors' interests.

Taken together the two elements of the story that have emerged into the public so far only paint a partial picture. But given the seriousness of what is alleged, they would seem to justify a full investigation by the takeover panel, the outcome of which must be made public to reassure investors and everyone else with an interest that the highest standards are enforced in the Irish market.