An attempted boardroom coup at Johnston Press continues to be thwarted with a questionable “poison pill” defence that may hands charge of the newspaper writer to the lenders.
Christen Ager-Hanssen, the activist shareholder plotting to oust chairman Camilla Rhodes and also the company’s senior management, continues to be made to delay a demand an Remarkable General Meeting after advisors discovered the tripwire in bond documents.
A few days ago Mr Ager-Hanssen is at talks with lawyers in the City firm Mishcon de Reya regarding how to circumvent the mechanism, referred to as a “dead hands proxy put”, when preparing for any new attack.
Johnston Press placed the dead hands proxy put in its bondholder contracts if this last refinanced its £220m debt pile 3 years ago. Such terms can secure lower rates of interest but could also trigger a default if shareholders part of to appoint new company directors.
Just the existing board has the ability to usher in or approve company directors. Mr Ager-Hanssen’s plans might have meant Johnston Press might have needed to pay back its bondholders immediately, that the battling company can’t afford. In this scenario, lenders would gain charge of the organization and shareholders could be easily wiped out.
Dead hands proxy puts came under scrutiny within the U . s . States recently and also have been criticised as tools that permit boards to undermine shareholder sovereignty to defend against activists. A Delaware court has branded the strategies “highly suspect” among claims it represents a breach of directors’ responsibilities to shareholders, who’re unlikely to election for change that will hands a business to the lenders.
Johnston Press is thought to be the very first illustration of an activist coming facing this type of poison pill within the United kingdom. Mr Ager-Hanssen, the master of 12.6pc of Johnston Press and also the Swedish form of Metro, stated he was seeking new routes to seize control.
He’s arranged new company directors such as the veteran newspaper executive Steve Auckland to provide a radical shake-from the writer from the i and lots of local titles, so that they can rebuild equity in the organization, that is presently dwarfed by its financial obligations.
The Norwegian branded Johnston Press’s dead hands proxy put “a grotesque abuse of fiduciary duty”.
He stated: “The poison pill cynically deprives shareholders of the fundamental to alter the board because they think fit. That power continues to be stolen from their store. This really is simply corporate thievery of power by which just the company directors can decide who replaces them. The board seeks to experience shareholder and bondholder interests from each other with the hope the balance of power usually stays at the disposal of a couple of cozy fat cats.”
Mr Ager-Hanssen is supported by other investors including Very Amber, the greatest shareholder with 18.2pc. It’s criticised Johnston Press’s own tries to restructure its financial obligations and also the company’s remuneration policies. Since 2013 the board continues to be compensated £6.4m, as the company’s valuation has collapsed from greater than £100m to simply £15m. Johnston Press declined to comment.