Three well-known WA brands are involved in corporate showdowns.
THE boardroom can be a surprisingly brutal place at times, and 2011 is no different with several stoushes under way among some of Western Australia’s most retail-focused industrial companies.
Blinds and curtain supplier Kresta Holdings, moped manufacturer Vmoto and property fund group Aspen Group are at various stages of corporate life-and-death struggles between incumbent boards and disaffected shareholders.
At Kresta, chairman and substantial shareholder Ian Trahar has launched a takeover bid after facing calls for him to be removed as a director amid a falling out with fund manager Hunter Hall, a long-term shareholder in the business. Both sides have accused the other of trying to take control of the company.
Vmoto’s former managing director, Patrick Davin, is trying to remove former executive chairman Russell Goodman from the board. After Mr Davin’s move, Mr Goodman, in turn, sought the removal of another long-term director, Trevor Beazley.
He has since withdrawn that call.
Out at Aspen it is early days in what seems likely to be an equally bitter battle. Former managing director Angelo Del Borrello has combined his 3.3 per cent interest in the property group with that of boutique fund manager Entrust and its clientele.
Last week, the pair lodged substantial shareholder notices that were a precursor to this week’s move to oust Aspen chairman Reg Gillard and non-executive director Terry Budge, as well as managing director Gavin Hawkins.
Mr Del Borello, Entrust Funds Management managing director David Franklyn and funds management industry veteran Richard Colless would replace those directors.
While the Aspen battle has the most riding on it in terms of outright shareholder funds involved, the Kresta punch-up is certain to attract the most attention now the boardroom stoush has become a full-blown takeover battle.
The two key players – WA-based Mr Trahar and interstate fund management boss Peter Hall – have plenty of ‘battle experience’.
Mr Trahar, whose privatised investment vehicle Avatar holds nearly 20 per cent of the Malaga retail blinds manufacturer, is a veteran of the corporate arena, notably Ranger Minerals, medical group Gribbles and industrial company Kalamazoo.
He has been interested in Kresta for about two years since identifying it as an opportunity. He wanted to sell another business of his, a major supplier and installer of electrical equipment called Arlec, into Kresta. His approach was rebuffed by Kresta’s management prior to him joining the board and again after he became a director in 2010, shortly after emerging with his stake in an arrangement with Hunter Hall, which sold down half its holding to retain 10 per cent of the company.
Mr Trahar became chairman in June and, shortly afterwards, long-running managing director Tass Zorbas resigned, followed by an announcement of significant inventory write-downs.
Where the backlash against Mr Trahar started is hard to determine but most likely lies in the Arlec deal, which has now been taken off the table, even though he maintains the strategy involved is right for Kresta.
He believes the retail blinds market is set to become more automated and that the purchase and installation of imported motorised equipment is a trend Kresta can take advantage of.
What is clear, though, is that the differences between the two camps crystallised in full at Kresta’s annual meeting in November when Mr Trahar voted against Hunter Hall’s nominee to the board, Rick Taylor.
Hunter Hall has requisitioned an extraordinary general meeting to remove Mr Trahar and Peter Hatfull, who was the fund manager’s nominee.
Mr Trahar has now gazumped Hunter Hall with a 32.5 cents per share bid to value the company at $46.9 million.
The bidding camp said the offer represented a nearly 40 per cent premium on the volume weighted average share price for the period from the annual meeting to when Hunter Hall formally started its attempt to remove Mr Trahar from the board.
Kresta shares have closed as high as 46 cents each in March last year, but have generally been below 40 cents and dipped substantially in recent months – since inventory write-downs of up to $6 million were made public in September – closing as low as 21.5 cents in mid December.
The bid, via another of Mr Trahar’s private companies, Wildweb Enterprises, values goodwill and intangibles at about $28 million. The rest of Kresta’s value is thought to be in its extensive property portfolio.
Key conditions of the bid are that Kresta’s shareholders vote against the Hunter Hall putsch and that Wildweb and its associates attain at least 40 per cent of the company.
Apart from Mr Trahar’s 19.6 per cent existing stake, the other big shareholders are Hunter Hall, which has rebuilt its stake back to nearly 20 per cent, Perpetual at around 6 per cent and Si Chuan Cheou, who is a major supplier and represents somewhere between 9 and 13 per cent of the stock. One difference between the Kresta fight and those at Vmoto and Aspen is the active involvement of past managing directors.
At Aspen, Mr Del Borrello is seeking a return to management control of the company with the support of Entrust, a wealth management business established by former Hartleys broker Graeme Yukich.
Mr Franklyn, who recently joined the board of Nomad, said despite Aspen being significantly undervalued by the market, its share price continued to languish against its peers. He believed this was predominately due to investors not being convinced of the group’s strategy and how the existing board would bridge the value gap between the group’s share price and net asset backing.
Aspen’s leadership counterclaimed saying the company was well managed and that new debt facilities currently being negotiated would underpin growth for the medium term.
At Vmoto, Mr Davin does not appear to be seeking to return to an executive role at the moped maker, which ended in November, just eight months after he relocated to China to be close to its manufacturing centre. Mr Davin remains a substantial shareholder and is believed to be at odds with the plans Mr Goodman had as executive chairman, including moving the company’s Australian base to Queensland.
Last month, the Vmoto board resolved that Mr Goodman would become a non-executive director and the company would reassess the decision to move its headquarters.
In another boardroom stoush, IFS Construction Services executive chairman Billy Ong has consolidated his position after the resignation of three directors – Bill Ryan, Scott Williams and Ian Spence – ahead of a meeting seeking their removal.
