31/01/2011 - 13:38

Entrust moves on Aspen board

31/01/2011 - 13:38

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Aspen Group major shareholder Entrust Funds Management has confirmed it has requested a meeting of shareholders to discuss replacing most of the current board, including managing director Gavin Hawkins.

Aspen Group major shareholder Entrust Funds Management has confirmed it has requested a meeting of shareholders to discuss replacing most of the current board, including managing director Gavin Hawkins.

The requisition also contains resolutions for the removal of Aspen chairman Reg Gillard and non-executive director Terry Budge.

The directors would be replaced by former Aspen co-founder Angelo Del Borello Entrust Funds Management managing director David Franklyn and funds management industry veteran Richard Colless.

Mr Del Borello holds 3.3 per cent of Aspen's shares, and interests associated with financial services group Entrust Funds Management hold just over 4.5 per cent, giving the group a collective stake of more than 7.8 per cent.

Mr Franklyn said Entrust had become very concerned with Aspen's corporate direction and said it displayed no ability to restore shareholder value.

Entrust said it had undertaken substantial analysis that showed Aspen wasundervalued, trading at a a 33 per cent discount to net asset backing, which Entrust claimed was the deepest discount of any S&P/ASX 300 real estate investment trust that only invests in Australia.

"This net asset backing does not ascribe any value to the funds management business which generated 22% of the group's EBIT in financial year 2010," Entrust said.

Mr Franklyn said Aspen's immediate strategy of refurbishing non-core assets into premium assets, such as the Tower 8 development in Adelaide, would likely result in a reduction of earnings per share.

"In Entrust's view this strategy appears defensive in nature and appears to have come about due to the group lacking the capabilities to find an alternative off-balance sheet solution," he said.

Mr Franklyn said it was only after careful consideration that Entrust had decided to requisition a meeting of shareholders.

"We believe that Aspen has strong and experienced line management. Unfortunately, we have reached the conclusion that there needs to be revitalisation of the board and a renewed strategy to fulfill its potential," he said.

"Given Aspen's potential and the 33 per cent discount to NTA at which it trades, we see a very good opportunity here to create value for all investors."

With the objective of creating a leading Australian property group we have assembled a non-executive Chairman and director with significant experience in both real estate and funds management.

Mr Del Borello parted ways with Aspen mid-June last year, in a move current managing director Gavin Hawkins said was aimed at establishing a more traditional management structure and clear reporting lines.

Aspen said in a statement released to the ASX today that its board remained unanimous that it was not in the group's best interest for Mr Del Borello to be reinstated as managing director.

"Should Mr Del Borrello and Entrust decide to requisition a meeting of security holders, the board will comply with its obligations and provide security holders with all of the information they need to make a decision about the future composition of the board," the statement said.

"That process will be undertaken, so far as possible, to avoid unduly prejudicing the ongoing commercial activities and interests of Aspen and its security holders."

Meanwhile, Aspen also announced today it had appointed former Mallesons Stephen Jaques Sydney executive Frank Zipfinger to its board of directors.

Aspen Group managing chairman Reg Gillard said Mr Zipfinger's appointment strengthened the group's experience, particularly on the eastern seaboard.

 

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