ANGRY shareholders in publicly listed investment house Asset Backed Holdings used their annual general meeting to voice dissent over the company’s performance and the amount of fees paid to directors and consultants.
ANGRY shareholders in publicly listed investment house Asset Backed Holdings used their annual general meeting to voice dissent over the company’s performance and the amount of fees paid to directors and consultants.
Outspoken shareholders claimed that Peter Huston and Michael Perrott took $600,000 in directors’ fees, consultancy fees and management fees paid to companies that they control.
Some of these shareholders claimed the pair also took part in a rights issue to fund the company’s activities in relation to Christmas Island phosphate miner Phosphate Resources Limited at 35 cents a share and have seen that price fall to 13 cents.
Amid the shareholders’ questions, it was also revealed that Asset Backed had considered a plan to take over Phosphate Resources and marry it with Norwest Chemicals, a China-based phosphate company owned by Asset Backed director David Argyle, to create a listed regional agrichemicals business.
Asset Backed holds about 30 per cent of Phosphate Resources.
Tensions are also still running high at Asset Backed’s only other major investment, property management company Aliquot Asset Management.
Equitilink eLink chairman Paul Crowther, who was admitted onto Aliquot’s board along with his fellow Equitilink directors Andrew Brown and Bruce Burrell in controversial circumstances at an extraordinary general meeting in February, has since resigned his directorship.
Mr Brown and Mr Burrell are still on the property manager’s board.
At Asset Backed’s AGM disgruntled shareholders Hamish Smith, John Flint and Australian Shareholders Association WA treasurer Gerry Pauley took issue with a proposal that the maximum payable directors’ remuneration be increased from $150,000 per annum to $250,000.
They suggested that Mr Huston and fellow director Michael Perrott should not be allowed to vote the shares from Troika Securities Ltd, a company that they control.
Mr Smith said that he had received legal advice that voting the Troika shares in favour of increasing directors’ remuneration would be illegal, a view that was disputed by Mr Huston.
According to the annual report, Troika Securities is Asset Backed’s largest shareholder, holding a 17.74 per cent stake.
Asset Backed director David Argyle said he was also concerned about the amount of fees Mr Perrott and Mr Huston had taken from the company and voted his shares along with those of the shareholders who opposed the move.
According to the annual report, Mr Argyle received $37,429 in consultancy fees but was not paid a director’s fee.
He claimed the Troika companies controlled by Mr Perrott and Mr Huston had also taken about $500,000 in fees out of Phosphate Resources.
However, the resolution was carried 19.2 million shares to 14.5 million shares.
Both Mr Perrott and Mr Huston said the increase in director’s fees was necessary to meet new corporate governance standards that the ASX wanted to introduce.
They said the extra funds would be needed to attract an independent chairman and independent non-executive directors to the company. They also stressed that they did not intend to increase the remuneration of current non-executive directors from their current $2,000 per week.
Mr Huston also told shareholders that because of the ASX corporate governance standards, the fees charged by Troika would also be likely to increase.
He said the Troika arrangement was still the most cost-effective for Asset Backed, a view disputed by at least three of the shareholders.
An attempt by some shareholders to reject the adoption of the company’s annual financial report and to stall the re-election of Peter Huston as a non-executive director also failed.
Several shareholders at the meeting claimed they were angered by a number of items in the company’s annual financial statement, including fees paid to Mr Huston and Mr Perrott and to companies controlled by them as well as the apparent failure to record the disposal of Allied Mining and Processing Ltd.
According to the annual report, Asset Backed had held a $1.179 million investment in Allied in 2001 and in 2002 that investment was nil.
A search of Australian Stock Exchange records shows that the sale of the stake in Allied was announced last year.
Mr Perrott has resigned as Asset Backed’s executive chairman and is now listed as its CEO. Mr Huston resigned as its managing director and was re-elected as a non-executive director.
When questioned about the future of the company’s stake in Phosphate Resources both Mr Perrott and Mr Huston said the idea of marrying the phosphate miner with Norwest Chemicals had been one of the options the company had been considering.
After the meeting, Mr Argyle said Asset Backed had intended to take a controlling stake in Phosphate Resources to carry that plan off.
Mr Argyle had made it possible for Asset Backed to boost its stake in Phosphate Resources because he held 700,000 shares in the miner and sold a part of that holding to Asset Backed in return for a seat on the investment house’s board.
That plan was stalled, it seems, when the Takeovers Panel was asked to investigate a $4.2 million share buyback that Phosphate Resources had conducted.
That was followed six months later by a $4.2 million rights issue that Asset Backed had offered to partially underwrite.
Before the share buyback Asset Backed had held just under 20 per cent of the company. When the buyback had concluded it held 26.7 per cent because it did not take part.
If the rights issue had not been fully taken up, Asset Backed’s stake in the miner could have increased to nearly 40 per cent.
The Takeovers Panel stopped the rights issue in February and Asset Backed made an undertaking to not revisit any further rights issue until March 2004.
Mr Perrott, Mr Argyle and former Asset Backed director Anthony Rigoll had all been on Phosphate Resources board during the time the share buyback and rights issue had been conducted.