The panel determined that unacceptable circumstances might have arisen during the retailer's bid. Last week it extended the interim order to a final date of August 7.

Coles Myer is expected to initiate legal action in the Victorian Supreme Court or the Federal Court, arguing that it was misled by ALG directors.

Liquorland launched a cash bid for ALG at $1.20 a share on April 17 and waived all bid conditions on June 19 when it claimed control over 91.5 per cent of the shares.

Liquorland on July 12 applied to the panel for a stop order after discovering that ALG's results would fall short of levels previously indicated to the market. The panel yesterday published its reasons for issuing the interim order.

Evidence presented to the panel suggested ALG's sales revenue by June 19 was materially below budget and below earlier forecasts, and estimates prepared by Mr Tuxen appeared to indicate ALG's pre-tax loss would total about $5 million, a $10 million downturn from the company's forecast.

Sources said ALG's accounting systems were in disarray for about three months during the December-half, leading to confusion over stock levels and sales figures.

ALG hired accountants, including Mr Tuxen, to resolve the issues late last year. Mr Tuxen was appointed chief financial officer on April 18.

The panel said Liquorland submitted internal ALG memos, minutes of ALG board meetings, other internal papers, and statutory declarations from both Mr Tuxen and Mr Higgs.

Noting that the facts of the papers were yet to be tested in court, the panel said the papers showed ALG accounting staff between March and June "were addressing serious deficiencies in the company's bookkeeping, stocktaking, past accounts and information systems", and the board had known since December.

The panel said Mr Tuxen and Mr Higgs held "widely different views on material items" valued between $2million and $4 million right up until June 19, the day the ALG directors resigned and handed over control to Liquorland.

The Age

-- Anonymous, August 02, 2001