'No hope' for Abano ouster bid
Rebel Abano Healthcare shareholders Peter Hutson and James Reeves "haven't a hope in hell" of ousting chairman Trevor Janes, says influential investor Brian Gaynor.
Hutson and Reeves, who together own 19 per cent of the dentistry and audiology group, have demanded Janes' resignation, saying he was not independent and was not keeping shareholders properly informed.
They said they had gathered evidence creating a damning picture of the company's governance and performance.
"We believe the board needs to be overhauled in an orderly fashion," they said.
"We simply can't sit back and do nothing."
Abano yesterday issued a statement rejecting Hutson and Reeves' comments.
"The board supports Trevor Janes as chairman and remains unanimous in its support of the company's strategic direction," it said.
The move follows an acrimonious takeover attempt last year in which Hutson, Reeves and private equity firm Archer Capital tried to buy Abano for $7.14 to $7.80 a share.
The effort was rebuffed by Abano's board, which refused to allow the bidders access to its books for due diligence.
Abano referred to the takeover in yesterday's statement, saying: "We are not surprised that Mr Hutson, who failed in an attempt to take over the company at benefit to himself above other shareholders, continues to attack the credibility and value of the company."
Gaynor, whose Milford Asset Management firm owns Abano shares on behalf of clients, said he did not think the call for Janes' resignation would get any support.
"They [Hutson and Reeves] have been going round institutions for the last two or three months," he said.
"We had a conference call three or four weeks ago and I detected no institutional support for Hutson and Reeves."
Abano was an outstanding corporate communicator that was responsive to its shareholders, he said.
While Milford would like to see Abano slow its pace in buying more dental practices in Australia, the board was willing to listen to its point of view.
"I would encourage the board to look at its strategy, but that doesn't mean we want to remove the chairman."
Hutson and Reeves have called for Abano to halt its dental acquisitions, saying it places too much strain on the balance sheet and produces poor returns.
The group runs the Lumino chain in New Zealand and Dental Partners in Australia.
Analyst Stephen Ridgewell of Craigs Investment Partners said Abano's strategy meant its margins would increase over time because its costs would remain relatively fixed while revenues would increase as it bought more dental practices, "but that requires them to continue buying".
"Given they've got the infrastructure to acquire you wouldn't think it would be a smart idea to stop."
In a research note dated December 20 Ridgewell valued the stock at $7.16 a share, although the value to a buyer in a takeover scenario would be in the range $7.82 to $8.48.
Abano shares were up 3c to $6.45 in thin trading on the NZX yesterday.
Hutson and Reeves said if Janes did not resign they would call a shareholder meeting to put the issue to a vote, suggesting a date of May 27.
Under Abano's constitution any shareholder with at least 5 per cent of voting rights can call a shareholder meeting.
Hutson and Reeves said Janes was not independent because he was also deputy chairman of ACC, whose investment fund owns Abano shares.
Under NZX rules, Janes did not qualify as an independent director when he described himself as such during the company's board elections last year, they said.
In March this year the NZX issued a waiver allowing ACC board members to qualify as independent directors under its listing rules.
As well as Janes, the waiver is particularly relevant to ACC director James Miller who serves on the boards of listed companies Mighty River Power and Auckland Airport.
- Fairfax Media