New board looks to change strategy for Victoria
SHAREHOLDERS in carpet manufacturer Victoria are being asked to vote on a new strategy designed to enhance their investment and generate new business for the firm.
The company, which operates Westwood Yarns in Holmfirth, underwent a major upheaval last year which resulted in the old board being ousted in favour of a new set of directors promising to turn around the fortunes of the business.
The new directors said at the time of their coup that they wished to directly link the performance of key personnel to the creation of wealth for shareholders.
The new board said the approach had been supported by a significant number of private and institutional shareholders. The strategy has been to design a new business model based around the performance of new chairman Geoff Wilding.
Following talks with its advisers, the company said it would enter into an agreement with Mr Wilding which would see him work to generate “significant value for all shareholders”. In return, Mr Wilding will be finally rewarded for his efforts but he will only benefit providing sufficient business is forthcoming.
The new model will see Mr Wilding pay a non-refundable premium of £20,000 to the company. However, the high risk strategy will see Mr Wilding having to pay back up to £100,000 if shareholder value is depleted.
At least £3 per share must be returned to shareholders within the next two years before any value can accrue to Mr Wilding under the contract.
The board said its aim was to grow the business in both the UK and Australian markets, especially the latter where Mr Wilding has significant experience.
In addition, the board said it was confident of improving productivity and would look to dispose of non-core and underperforming assets to help generate extra value for the business.
The turnaround is badly needed. In a trading update, the Worcestershire company said the business was facing serious challenges.
“The group is experiencing strong economic headwinds in each of its major markets, has a cost structure that is too high for its current level of business, limited competition advantages, excessive debt levels in the UK, surplus production capability and a considerable over supply of stock in the UK,” it said.
“Following discussions with the company’s advisers, the board believes that the proposed
contract is an appropriate way of aligning the interests of Mr Wilding, as the key executive responsible for putting the company’s strategy into effect and achieving the key objectives which emerge from the strategy, with the interest of all shareholders”
Shareholders will vote on the proposals at a general meeting set for February 20.