A rift among directors of Bellamy's Australia over support for chief executive Laura McBain to remain at the helm of the troubled organic baby food maker has emerged as a key factor in a shareholder revolt led by Jan Cameron to dump the board.
Four non-executive directors including former Billabong CEO Launa Inman, Shanghai-based Michael Wadley, former McKinsey & Co director Charles Sitch, and Patria Mann were asking tough questions about Ms McBain's performance following a 40 per cent downgrade to earnings in early December put down to weak sales in China amid changing regulations. The stock has been suspended from trade since mid-December.
A source confirmed to The Australian Financial Review that while chairman Rob Woolley has continued to stand by Ms McBain, the group of independent directors wanted her to step aside.
This was part of the impetus for a move by Tasmanian entrepreneur and Kathmandu founder Ms Cameron, along with several other dissident shareholders – including Bellamy's largest, the Black Prince Private Foundation – to try to remove the independent directors.
Ms Cameron told The Financial Review that both Ms McBain and Mr Woolley should remain at the Launceston-based company (although Mr Woolley would remain on a temporary basis) and the four non-executive directors should go. She and three other allies should be installed.
"It was a group of shareholders, there was a discussion and several phone calls between each other and we thought it would be best to act," Ms Cameron said.
"I think it's important for the company to go back to basics and focus on making the best baby food in the world and selling it. And eliminate the corporate bullshit that's going on.
"This is a small cap company and we need to be able to respond quickly to market changes. Laura [McBain] has demonstrated incredible adaptation as she steered Bellamy's to a much larger company."
Over the past few days in discussions between the major shareholders and the incumbent board, Ms Cameron offered to help fund the company and an anticipated shortfall in cash flow coming up over the next few months due to a shortfall in projected sales.
Ms Cameron said the incumbent board refused to step aside and had refused the funding offer.
While some suggested a possible capital raising may be on the cards, that was dismissed by a source close to the company.
Just days before Christmas the board received a requisition notice from Black Prince, which is based in Singapore but is believed to be domiciled in the tax haven of Dutch Antilles. The notice was served through Kemp Strang lawyers demanding that the four directors resign within 24 hours.
Rodd Peters, who has been put forward as an alternate director by the shareholder group, is acting as a consultant to Kemp Strang and has previously provided legal advice to Ms Cameron.
Another source said shareholders had been "left in the dark" over the health of Bellamy's.
"A six-week suspension without any update throughout that period is unheard of. You can't have a six week void," the source said referring to Bellamy's suspension from trade since December 14.
"The brand starts to get trashed. You are better to keep shareholders informed and not go into a cone of silence."
Bellamy's has plans to update the market on January 13 after renegotiating agreements with suppliers. The company has take or pay contracts with Bega Cheese and Fonterra.
Problems with Fonterra deal
The five-year multi-million dollar supply deal with Fonterra was struck in 2015 and is proving problematic. It is understood that Bellamy's must pay significantly more than the reported $27.5 million over the lifetime of the contract, whether it sells the final product or not.
Mr Woolley has chaired Bellamy's since 2007 when an investment group he created bought the assets of the then family run organic business.
The holding group, Tasmanian Pure Foods, has several wealthy backers including Ms Cameron, who put in $3 million, and BRW Rich Lister Bruce Neill, who invested $1 million. Guinness Peat Group along with then-director Graeme Cureton invested just over $1 million. Ms Cameron said she has the backing of Mr Neill and Mr Cureton.
Tony Shadforth, of Shadforth Financial Group, and Bob Wilson, of Classic Foods, which was sold to Murray Goulburn, were also early backers.
GPG sold out at 50¢ on the dollar to other shareholders before the August 2014 float. Ms Cameron also sold, but is believed to have reappeared via Singapore-based Black Prince.
She has denied any direct relationship with Black Prince, this week confirming her personal holding in Bellamy's is 2 per cent via her Elsie Cameron Foundation.
Since listing at $1 a share, Bellamy's stock price has rocketed to as high as $16.50, but it last traded at just $6.68.
