By Brian Robins
A group of dissident shareholders seeking to take control of troubled baby formula group Bellamy's Australia will meet next week to map out their push to topple the company's board.
Bellamy's Australia is due to issue its long-awaited trading update next week after its shares were suspended from trading on December 12.
The company sought the trading halt to renegotiate onerous supply contracts after sales collapsed in the key China market, where it had begun selling discounted product which has undermined the group's market position.
However the prolonged suspension to trading in Bellamy's shares has prompted a group of shareholders commanding an estimated 35 per cent of the capital to come together in a bid to unseat the four independent directors out of the six directors on the Bellamy's board.
A Jan Cameron-backed group is looking to dump Bellamy's directors.Credit: Nic Walker
If they succeed, only Rob Woolley, the chairman, and the Laura McBain, the chief executive, would remain among the existing six directors.
"As major shareholders we've been shocked by the decline in shareholder value," said Jan Cameron, one of the dissident shareholders who is seeking a board seat.
"With no information forthcoming, it seems an extraordinary amount of time to be suspended from the sharemarket."
Directors without holdings
Ms Cameron famously made her money building up the Kathmandu chain, although she has had mixed success with other ventures since.
Bellamy's share price almost halved on December 2 after a trading update which pointed to weak sales in China, which prompted the share price to dive to $6.85 from $12.13 a day earlier.
Ms Cameron said the four non-executive directors she and her supporters are seeking to unseat – Patria Mann, Launa Inman, Michael Wadley and Charles Sitch – between them hold fewer than 70,000 shares in Bellamy's. Some hold no shares at all.
The dissident shareholding group is seeking to install Ms Cameron, Chan Wai-Chan, Vaughan Webber and Rodd Peters as directors. Mr Peters, a lawyer, represents the Black Prince Private Foundation, Bellamy's largest shareholder with a 14.5 per cent stake.
Ms Cameron says she holds no part of the Black Prince Private Foundation, but she does have a direct holding of about 2 per cent of Bellamy's capital.
A new chairman could come from the dissidents, but is likely to be an external appointment. I would not be the chairman. I'm adamant it wouldn't be me.
Jan Cameron
"We're very concerned with what has happened with Bellamy's and our interests are aligned with other shareholders," Ms Cameron said of the push to unseat the Bellamy's board.
"We speak for around 35 per cent of the capital. Black Prince is based in Singapore. I've not met anyone associated with that entity."
New chairman sought
If the dissidents are successful, it is likely that Mr Woolley would be replaced as the chairman after a time, although it is not clear whether an external chairman would be brought in.
"We would like [Woolley] to stay until we find a new chairman. He has a lot of knowledge to pass on," Ms Cameron said.
"A new chairman could come from the dissidents, but is likely to be an external appointment. I would not be the chairman. I'm adamant it wouldn't be me."
Ms Cameron made it clear she supports keeping the existing chief executive Ms McBain, despite the company's woes, and amid speculation it was a push to unseat Ms McBain that triggered the dissidents to act.
"She is very critical to turning the company around due to her corporate knowledge and customer and supplier relationships," Ms Cameron said. "She is best placed to do that."
Asked how much of the blame for the company's woes could be sheeted home to Ms McBain, Ms Cameron said: "It is very easy to pin the blame on one person – there is a lot of scapegoating going on. We won't know until we get in there. Making mistakes is a huge learning experience, and things could be turned around – but I'm not saying she has made mistakes."
Margin pressure
Analysts and rivals have blamed Bellamy's problems on the move to discount product sold in the key China market, which has undermined its reputation, but Ms Cameron rejects that.
"It is more complicated than that. A2 Milk has a lower cost of manufacturing as it is not using organic product. While its price is as high as Bellamy's, it offers resellers better margins. Therefore resellers are pushing A2 Milk's product."
Bellamy's also has onerous supply contracts, particularly with Fonterra, which it is seeking to renegotiate as part of plans to revive its fortunes.
Even though Ms Cameron said she has just a 2 per cent shareholding in Bellamy's, if there is the need to raise fresh equity, she wants to ensure it is not via a placement but rather from existing shareholders investing additional funds.
"There's been talk of rasing more capital. We would prefer a raising among existing holders, rather than an external placement," Ms Cameron said, pointing to the potential need for $10 million to $20 million of additional capital.