Stanmore Coal’s largest shareholder, Golden Investments, has called upon the Company to convene and Extraordinary General Meeting (EGM) of the members of the Company in an attempt to remove Stanmore’s Managing Director and Chair.
The request comes after Golden Investment’s unsuccessful $240 million takeover bid for Stanmore in November 2018.
A power struggle has now emerged between the companies, with Golden Investments calling for Stanmore’s Chair, Mr Stewart Butel, and its Managing Director, Mr Dan Clifford be removed as directors of the company.
The major shareholder is also pushing for the election of Cameron Vorias as an independent non-executive director and chairman, and Jimmy Sen Ming Lim as a non-executive director.
In a released statement, the Board of Stanmore Coal stated it believed that Golden Investments was attempting to obtain effective control of the Company without paying other shareholders a control premium, by “seeking to remove and replace the Company’s current Chair and Managing Director with their nominees”.
Discussions regarding Stanmore’s Board composition began in February 2019 after Golden Investment’s unsuccessful takeover offer expired.
Stanmore has confirmed that it agreed to appoint Mr Lim and advised Golden Investments that it was in the process of recruiting an additional independent non-executive director, subsequently appointing Mr Darren Yeates to the position.
After being served with Section 249D Notice, Stanmore’s Board reconfirmed to Golden Investments that it was willing to appoint Mr Lim and offered to appoint Golden Investment’s choice – Mr Vorias – subject to terms and protocols including those to manage conflicts of interest.
This offer was made on the basis that Golden Investments withdraws the Section 249D Notice, to protect all shareholders from the consequences of a public fight over the Company’s Board composition.
“Golden Investments rejected the Board’s offer on the same day and declined a request for an urgent meeting to discuss the matter,” said Stanmore.
Golden Investments claims in its notice that Stanmore’s refinancing terms are not competitive or “commensurate with the Company’s operations and financial position”.
In a response, Stanmore believes that this claim is based on benchmarking against companies “with operations and financial arrangements which the Board considers to be valid comparisons to Stanmore”.
“The Company’s interest rate on drawn funds has been reduced by 2 per cent, which is a significant improvement in current market conditions,” said Stanmore.
Golden Investments claims that is has commissioned an independent review that has found cola sold from the Isaac Plains Complex could have achieved a premium to Stanmore’s actual FY19 Average Sales Price and has consequently questioned the Stanmore’s coal marketing function.
Stanmore has argued that Golden Investments has not raised this concern previously, stating that it was not provided with the review upon request.
“Stanmore’s coal contract pricing and product specifications would be critical inputs to any review of the Company’s coal pricing,” commented Stanmore.
“Given that this information is confidential, the accuracy of the review’s analysis and the validity of its findings are not clear.”
Additionally, Golden Investments claims in the 249D Notice to have lost confidence in Stanmore’s Board, which Stanmore reports to come as a surprise.
“Following the release of FY19 half-year results, Golden Investments congratulated management in writing on the Company’s performance,” stated Stanmore.
“Stanmore’s FY19 results will be at the top end of or exceed it FY19 guidance.”
Stanmore’s Board considers that the attempt by Golden Investments to remove key members of its Board and management team is likely to have a negative impact on the Company’s share price, customer relationships and employee morale.
“After a failed bid that undervalued Stanmore, Golden Investments is trying to take effective control of the Company, this time without paying any premium to their fellow shareholders,” said Mr Butel.
“We have built Stanmore into a successful, independent Australian resources company and Golden Investments’ refusal to discuss its alleged concerns with us shows it is more concerned about achieving its goal of obtaining effective control of the Board than about the performance of the business.”
An EGM will be held in September 2019, taking into account the requirements of the Company’s constitution, the Corporations Act 2001 (Cth) and the ASX Listing Rules.