Murtagh buys up Davenham shares and calls for second EGM

TONY Murtagh, the entrepreneur behind The Money Group, has increased his shareholding in troubled Manchester-based lender to more than 5%, giving renewed vigour to investor David Anthony’s campaign to take control of the firm.

Murtagh said that he was one of a number of Davenham shareholders who were not informed by the company of last week’s extraordinary general meeting tabled by Anthony, where his proposal to remove the company’s current board was rejected.

He has said that he now plans to requisition a second extraordinary general meeting and has pledged his support for Anthony’s proposals, which involve the removal of current chairman James Kerr-Muir and managing director Paul Burke. Anthony wants to appoint himself as chair and Gary Jennison as CEO.

Murtagh’s purchases helped to push Davenham’s share price up from 2.25p last week up to 3.4p yesterday morning, before falling back to around 2.75p.

He said that Gary Jennison “would make a great CEO” and argued that their stated strategy of reinvigorating Davenham’s asset and trade finance arms of the business should be given a chance.

Anthony’s resolutions to remove Davenham’s current directors received 4.4m votes in favour last week, and just under 10m votes against.

However, there are more than 26m shares in circulation, so shareholders responsible for around 45% of the company’s total equity did not vote.

Anthony conceded that an element of this was likely to be due to voter apathy given the share’s lowly value and the minimal chance of a return on their investment.

However, he believes that although the board was able to call on the support of a few key investors including Kingswood Property Finance – the London-based firm which bought a 29.13% stake in Davenham in December – many of the smaller shareholders who had not been notified of the meeting would be in favour of his plan.

Anthony added that Davenham had not posted his document spelling out his reasons for the EGM on its website, although it did distribute it to shareholders alongside the EGM notification. He acknowledged that the firm hadn’t breached rules by leaving it off the website, but felt that it should have been included to ensure shareholders were properly informed.

“People have said that I should requisition another meeting, but I would only do that if I were satisfied that these issues would be dealt with. Otherwise, what’s the point?”

Other shareholders have also expressed anger at the fact that they were not informed of the meeting.

Jason Snowdon, who owns around 0.65% of the company, said he was “appalled” by the fact that he was not notified. He added that he “fully supports” Anthony’s view that the current board should be removed.

A spokeswoman for Davenham said that the firm was “content that it has complied with all of its obligations”  in keeping shareholders informed. 

Davenham is in the process of winding down its loan book and has told investors that there is not likely to be any value left in their shares. The last figures published by the firm in November showed that it had £90m of loans left to collect but it owed its banking syndicate £111m.

Its circular to shareholders prior to the EGM stated that the board had the support of the banking syndicate. It also warned that if Anthony’s resolution was passed, the syndicate could recall its loan, sparking an insolvency process.

Murtagh questioned this logic, arguing that the banking syndicate should be willing to speak to anyone with a reputable plan to recover its assets and hailed the turnaround that Jennison embarked upon in his last role as CEO of Secure Trust Bank.

He also said that the salaries of Burke and Kerr-Muir combined amounted to more than £300,000 – money which he believed would be put to better use by employing more collection staff.

“If I were looking to turn it around, I’d be willing to work for nothing and take my reward if the share price came back again,” he said.

He has said that he intends to call another extraordinary general meeting “in due course” and has told shareholders who hold shares via trusts or nominee accounts that they should make it known to nominees if they intend to vote.