Davenham board warns against rebel coup
THE board at embattled finance house Davenham has urged shareholders to vote against their replacement at the second extraordinary general meeting convened to remove them in as many months.
The company has sent out a circular to shareholders informing them of the extraordinary general meeting convened by Tony Murtagh – a supporter of former Hitachi Capital CEO David Anthony and ex-Secure Trust Bank CEO Gary Jennison.
He has set resolutions which state that “given the need to secure shareholder value” Anthony and Jennison should be voted in to take charge of Davenham and that current chairman James Kerr-Muir and group managing director Paul Burke should be removed.
In its circular, the board said that the banking syndicate (to which Davenham owed more than £110m when the company provided its last update in November) has indicated that it does not wish to see any changes being made to the company’s board.
It said that the banks remain content for the board to continue working with the company’s largest single shareholder, Kingswood Property Finance, to assess whether a reconstruction of the group can be achieved.
“It is the firm belief of the board (having discussed the matter in detail with the banks leading the banking syndicate) that, if the resolutions are passed, the banking syndicate will not be minded to extend the maturity of the current on demand facilities beyond 31 March 2011.
“Failure to extend these facilities is likely to lead to the directors having to file for insolvency,” the statement said.
The company’s current board argued that if shareholders passed the resolutions it would, in their view, deprive them of “any remaining chance of a solvent reconstruction that might see some element of value for the company’s shareholders”, albeit adding that this remained unlikely.
However, Murtagh argued that the only way that shareholders are ever likely to see a return is if the current board are replaced.
“They keep saying there’s no value to shareholders, and that may be the case, but the only way I can possibly see any value will be if Gary and David are voted in,” he told TheBusinessDesk.com.
“At the moment, the current board just seem to be working for the banks.”
He said that Jennison and Anthony had bought substantial shares in the business through investment of their own capital and therefore had a vested interest in turning the company around, whereas the current board were still being paid significant salaries.
He added that if the current board believed strongly in the prospects for a turnaround, they would forgo a significant amount of their salary in return for shares.
The meeting to vote on the resolutions is due to take place in Manchester at 11am on March 10.
