Green energy plan keeps roller-coaster ride going, writes Jamie Smyth, Technology Reporter.

Baltimore Technologies' army of small shareholders could be forgiven for thinking they were the butt of a mischievous April Fools Day joke when they read their morning paper yesterday.

The 10,000 Irish shareholders, most of whom own fewer than 500 shares in the firm, must have choked on their cornflakes while reading about Baltimore's latest venture into "clean energy".

The announcement by Baltimore's chief executive, Mr Bijan Khezri, that the company would pursue a strategy of generating and selling green energy to firms is just the latest twist in a costly roller-coaster ride for punters.

Baltimore shareholders, many of whom chose to buy their stock on foot of misplaced broker and media recommendations at the height of the dotcom bubble, are nursing big losses. In February 2000 the firm had a valuation of £7.5 billion. It is now valued at about £20 million, just a few million less than the firm's cash reserves of £24.5 million.

Baltimore's fall from grace as a leading developer of encryption software has been recounted many times, and is generally blamed on a rash of speculative acquisitions undertaken by Baltimore's former chief executive, Mr Fran Rooney. Running out of cash as the market soured for technology firms, Mr Rooney quit the firm, enabling Mr Khezri to take over and perform a massive asset sale to raise cash.

This process finally ended in March 2004 when the final technology assets were sold off for €3.3 million by Baltimore, which has now become a financial shell.

To be fair, Baltimore's current management has done a reasonable job. Inheriting Baltimore in a bear market for technology stocks, at a time when it was haemorrhaging up to £17 million a quarter, was no easy task.

But Mr Khezri stepped up to the mark and cut back on many of the excesses of the dotcom era, including the salaries of Baltimore's management team. His public criticism of his predecessor's pay packet signalled a "shareholder-focused" approach for the firm.

There can be little criticism of the asset sale process pursued by Baltimore in the wake of its fall from grace. Mr Khezri was forced to sell all its technology units at the bottom of the market in light of the losses it racked up.

But after reducing Baltimore to a mere cash shell, Mr Khezri's decision to lead shareholders down another speculative path smacks of opportunism.

Despite putting together a "green energy" team headed by Mr David Weaver, the managing director of BP's gas, power and renewables business, surely most shareholders want to put the whole Baltimore roller-coaster ride behind them once and for all.

It also seems strange not to give shareholders an opportunity to vote for the liquidation of the firm at the upcoming extraordinary general meeting scheduled for early May. This process would return the cash pile to its 45,000 shareholders, and go at least some way to easing the pain caused by Baltimore's excesses.

But the curious shareholder base of Baltimore offers little protection to the small shareholder.

The institutions usually present in a publicly quoted firm have by now sold out. And the dispersed shareholder base has enabled Mr Khezri to pursue a much more aggressive strategy than would be possible in most firms.

But Mr Khezri will now face stiff competition from the Bermuda-based firm, Acquisitor Holdings, for its cash pile.

Acquisitor, which has built up a 12 per cent stake in Baltimore, specialises in acquiring stakes in undervalued firms and seeking ways to extract value from its investments. It has already declared war on Baltimore's management accusing them of "destroying shareholder value".

Last week it set up a website at www.baltimoreaction.com to appeal directly to Baltimore's shareholders to sack the board at the upcoming e.g.m. Acquisitor wants to install its own nominees as chairman and chief executive.

Unsurprisingly, Acquisitor has latched onto Baltimore's "green energy" strategy as a stick to beat its management with, accusing them of threatening whatever value remains in the company.

It has yet to reveal its own intentions for Baltimore's shell.

Ironically, Mr Khezri's plan to pursue green energy investments could be just the ticket that enables Acquisitor to gain control. It needs only a simple majority of votes cast at a future e.g.m to unseat current management. And with 12 per cent of votes already in the bag, Baltimore's executives could be fighting for their jobs.