The Australian Shareholders' Association (ASA) has said it will vote against rebel shareholder Jan Cameron's Black Prince Private Foundation motion to spill the board of the infant formula maker Bellamy's Australia.
This is the second blow in less than 24 hours for Ms Cameron who is leading the charge to dump four independent directors and install herself along with two allies, lawyer Rodd Peters and China consultant Chan Wai-Chan. Bell Potter stockbroker Vaughan Webber, one of Black Prince's proposed directors, decided to no longer pursue a board seat.
On Thursday three large proxy advisory firms all said they recommended shareholders vote against these resolutions at a meeting due at the end of the month. One proxy adviser, ISS, broke away saying it would recommend Mr Wai-Chan as an additional board member given his vast experience in China – a key export market for baby formula.
Following several meetings with both parties, ASA decided to vote against Ms Cameron's Black Prince which called the requisition meeting following a collapse in the company's value to just $465 million from its 2016 peak of $1.4 billion.
According to the notice from ASA Black Prince may have "legitimate concerns and valid arguments" for board and management changes at Bellamy's against the backdrop of serious weaknesses in stock control and inventory management, but a complete change of board and lack of disclosure around control of Black Price is "cause for concern".
"A more reasoned approach by Black Prince may have been to request one or two additional directors be appointed to the board to assist the existing board and management to get the company back on track. It is felt that Bellamy's has already commenced the turnaround of the business following what is seen as short to mediumterm operational issues. There was an oversupply of product and sales fell short of projections.
"Present management has since renegotiated contracts with suppliers and initiated cost savings measures to reduce expenses throughout the business. A further business update and the half-yearly profit announcement will be released prior to the EGM.
ASA added that new CEO Andrew Cohen will require some time to oversee these changes and to rebuild both investor and consumer confidence.
"A complete change of directors could possibly undo this work and result in disruption to the business and further pain for shareholders. Further, if the class actions are pursued, then the existing board and management team are in the best position to answer any charges," it said.
Tasmanian entrepreneur Ms Cameron, who founded retailer Kathmandu, this week clarified her holding following pressure from the corporate regulator. She is the single biggest shareholder at 17.63 per cent.
US hedge fund Delta Partners is the second largest investor at just over 8 per cent and BRW Rich Lister Bruce Neill is the third biggest shareholder at 7.4 per cent. Neither party has made comment on who they will support.
