Shareholder showdown for Cromwell board berth
A hard-fought battle between Cromwell Property Group and its major investor ARA Asset Management over the Singaporean player’s board nomination is expected to go down to the wire at the shareholders’ annual general meeting in Brisbane today.
Such are the stakes involved, that both sides have prosecuted an unusually intense effort to win support ahead of the AGM, lobbying institutional investors and fighting a minor tussle in court over proxy information.
Cromwell has hired proxy solicitation firm Morrow Sodali to work the register, while ARA has had Georgeson in its corner to drum up support.
In recent weeks it has become a battle for the hearts and minds of the retail vote as well, with the level of turnout a crucial factor in whether ARA can pass the 50 per cent threshold of those who vote to get its nominee, veteran director Gary Weiss, onto the board.
Working on a rule of thumb that roughly 80 per cent of the register will turn out, ARA, which holds a 23.7 per cent stake, would need to muster 40 per cent of the vote.
It can count on support from Singaporean billionaire Gordon Tang, whose Haiyi Holdings holds a 8.83 per cent stake. A heavy lobbying effort of other institutional investors is also expected to yield votes.
Cromwell’s vehement opposition to ARA’s nominee Dr Weiss underlines the deeper rift which has emerged inside the Brisbane-based fund manager over a series of issues during the course of this year.
The stand-off became entrenched in June when ARA was shut out of a $375 million capital raising by Cromwell, diluting its stake.
ARA has attacked Cromwell’s distribution performance and the remuneration handed to chief executive Paul Weightman, and also slammed the fund manager’s business strategy while singling out what it reckons is a risky exposure to Poland’s retail property sector.
Chaired by Geoff Levy, Cromwell accuses ARA of being heavily conflicted in its push into the boardroom because the two property fund managers compete in various markets for real estate and access to capital.
Not mincing his words, Mr Levy likened an earlier board stint by ARA’s Australian head David Blight to having a “fox in the henhouse” – Mr Blight stepped down in July – and raised a warning flag over the prospect of ARA trying to win control over the company from within the boardroom.
“If they want to make a bid for the company please do so,” Mr Levy told The Australian Financial Review last week. “But do so openly, out there, not by stealth.
“If you don’t like the way the company is being run, sell your shares. Do one or the other, that’s what normally happens.”
But in what may yet prove to be a decisive move, Dr Weiss – whom proxy advisers have said has too many directorships already – has offered to resign his directorship at Straits Trading, which holds a 21 per cent stake in ARA, if elected to the Cromwell board.
That concession has already assuaged concerns of a number of shareholders, according to ARA.
“ARA’s intention is to make its investment in Cromwell more valuable, which is exactly the same interest that every shareholder of Cromwell surely has,” he said.
