Sydney investment fund Hawkesbridge Private Equity has gained control of loss-making pharmaceutical wholesaler Advance Healthcare Group in extraordinary circumstances.
Sydney investment fund Hawkesbridge Private Equity has gained control of loss-making pharmaceutical wholesaler Advance Healthcare Group in extraordinary circumstances.
At a heated meeting last week, shareholders approved a complex recapitalisation that could deliver Hawkesbridge up to 80 per cent of Advance via a debt for equity swap.
Surprisingly, Hawkesbridge sold its 11 per cent shareholding on the eve of the meeting to newly appointed chief executive Ken Atkinson.
The share transaction drew the ire of PharmAust managing director Paul D’Sylva, whose criticism of the Advance board drew an angry response from Alex Bajada, who has retired from the Advance board but continues as a director of Hawkesbridge.
Mr D’Sylva told the meeting it was an “extraordinary coincidence” that Mr Atkinson had bought an 11 per cent stake on the same day PharmAust disclosed its 5 per cent stake in Advance.
Lying behind the fireworks is a battle over who controls Advance’s core business, Cottman Australia, which is a major pharmaceutical wholesaler in Western Australia and South Australia with annual turnover of $96 million.
Drug developer PharmAust put forward a proposal earlier this year, which Mr D’Sylva said was far less dilutionary and therefore a better deal for Advance’s shareholders.
Hawkesbridge chairman Christopher Rowe, who was recently appointed chairman of Advance, described PharmAust as an opportunist purchaser of shares.
He told shareholders that rejection of the Hawkesbridge proposal would almost certainly result in Advance going into administration.
Advance’s balance sheet reconstruction is part of a revival package that has included the appointment of new directors and the recruitment of Mr Atkinson.
When WA Business News asked Mr Rowe why Hawkesbridge sold its shares on the eve of the meeting, he said: “It’s very simple, we were approached by them and asked if they could buy the shares”.
Mr Atkinson said the management wanted to protect the business and be able to continue the restructuring, which he expects will return the company to profit next year.
Mr Atkinson added that he did not vote any of his shares on resolutions related to Hawkesbridge or the change of control of the business.
Mr D’Sylva remains unhappy with the conduct of the meeting, including the disallowance of five million proxies that were voted against the resolutions.
Critics of the restructuring are concerned that key players faced conflicts of interest, a charge Mr Rowe says was dealt with by relying on independent experts and independent directors.
Mr Rowe said Hawkesbridge had no desire to own all of Advance.
