Four former Peregrine directors were dealt a hefty blow yesterday in their fight against a HK$27 million lawsuit over alleged 'negligent misrepresentations' before the group's collapse. An appeal court, overturning a previous ruling, cleared the use of a pivotal document in the case against the four - Philip Tose, Alan Mercer, Francis Leung Pak-to and Peter Wong Wing-cheong. Cheeroll, part of the SHK group, claims it lost HK$27 million as a result of two sets of statements aimed at reassuring shareholders over the group's financial health and prospects. By relying on these documents, it claims it did not sell its Peregrine shares and thus suffered a loss. Yesterday, the appeal court ruled that the first statement, an announcement made in the press in October 1997, could form part of Cheeroll's claim against the four executives. The ruling will significantly bolster Cheeroll's case when it goes to trial. On October 27, 1997, Peregrine Investments Holdings took out a press advertisement in an attempt to quell market talk that it was in serious financial trouble. The announcement dismissed 'persistent rumours' of losses ranging from US$300 million to as high as US$1 billion, and concluded: 'Rumours of losses by Peregrine running into hundreds of millions of US dollars and of Peregrine's financial demise are completely false.' Less than three months later, on January 12 last year, Peregrine said it was going into liquidation. The four directors had argued that the announcement was made for the company, and was not a statement for which they assumed personal responsibility. However, appeal judge Mr Justice Anthony Rogers told the court yesterday: 'It seems to me it is clearly arguable that these statements were made by the defendants.' In particular, one paragraph in the October statement insisted that chairman Mr Tose would not be leaving Peregrine. Rather than the statement being the sentiment of the company only, 'the final paragraph can only come from one of the members of the board . . . Philip Tose', the judge said. The October announcement was followed by a second set of statements in December 1997. These included financial results for the first 10 months of the year, followed by a letter from Mr Tose and a circular to shareholders. The circular claimed that the directors were unaware of any material adverse changes in the financial or trading position of the Peregrine group. Cheeroll claims the statements were 'materially false' or misleading, and were intended to be relied upon by Peregrine's shareholders. The demise of Peregrine, once one of Asia's biggest independent investment banks, was caused by loans made by its fixed-income department to Indonesian corporates, in particular a US$265 million loan to taxi firm Steady Safe.