ARA Property Group's push to appoint Dr Gary Weiss (pictured) and Joseph Gersh to the board of Cromwell Property Group (ASX: CMW) has been successful today, with the vote supported by the family of billionaire Gordon Tang who ARA has previously denied any connection to.
At an EGM this morning shareholders voted 51.85 per cent in favour of Weiss' appointment and 59.22 per cent in favour of Gersh being named a director.
According to the results of the EGM, the appointments were made possible thanks to ARA receiving the support of the Tang family who hold approximately 16 per cent of issued capital in Cromwell and voted in favour of Weiss and Gersh today.
Previously Cromwell sought to establish a direct link between ARA and Chinese billionaire Gordon Tang, alleging there is an unlawful 'association' between the two for the purposes of the Corporations Act; a connection ARA denies.
As reported by the Sydney Morning Herald, Liberal Senator Paul Scarr recently argued the Foreign Investment Review Board (FIRB) needed to consider the bid given Cromwell owns or has a stake in strategic assets housing government departments in Canberra such as the Therapeutic Goods Association (TGA).
Corporate raider Weiss is director of The Straits Trading Company, a major shareholder of ARA. It is this alleged conflict of interest that saw Cromwell's board recommend shareholders vote against Weiss' appointment.
In addition, Cromwell alleged Gersh was unable to be independent considering he is a former senior partner of legal firm Arnold Bloch Leibler, ARA's legal advisors.
The result is a coup for Singapore-based ARA and comes as the property group is involved in what Cromwell leaders have repeatedly claimed is a takeover by stealth.
ARA's bid for the real estate investor, which has been extended until 9 October, would give it almost half of Cromwell's shares if successful. ARA currently holds a 27 per cent interest in Cromwell.
Cromwell chair Leon Blitz congratulated both Weiss and Gersh following the AGM.
"Cromwell respects the outcome of the vote, congratulates the nominees on their election and will now induct them as non-independent, non-executive directors," says Blitz.
"In line with best practice corporate governance, the Cromwell Board will manage potential conflicts as they may arise, as it did with ARA's previous Board representative.
"The Cromwell Board looks forward to both of the new directors bringing their respective skillsets and experience to work productively for the benefit of all securityholders equally."
Not only is Weiss' appointment a win for ARA, but it is a win for the new Cromwell director himself.
Today's bid to secure a seat on the Cromwell board was Weiss' third attempt to do so, with shareholders voting against him the previous two times.
Speaking today at the AGM Weiss vowed to maintain independence.
"I've never been involved with ARA. I'm neither a director, executive or non-executive of ARA and nor have had any executive role with ARA," said Weiss.
"If elected to the board of Cromwell I'm entirely conscious and aware of my fiduciary obligations and I intend to faithfully and rigorously uphold the duties of my obligations as a director of Cromwell to advance and protect the interests of all securityholders in Cromwell."
The heat was turned up on ARA earlier in September after Cromwell's management berated the Singapore-based company over what they claimed to be a "patently incorrect understanding" of Cromwell's earnings as part of the leadership scuffle.
On 1 September ARA sent out a second supplementary bidders statement claiming Cromwell's operating earnings per share (EPS) had fallen 11.5 per cent when excluding an internal fee.
Cromwell said its FY20 operating EPS was up 3.5 per cent on FY19, highlighting a strong result despite a challenging environment during the COVID-19 pandemic.ARA also claimed Cromwell's gearing increased to a sector high of 47.5 per cent on a look-through basis, and that its distributions were in excess of cash flow.
In response, Cromwell hit back with a shopping list of observations rebutting ARA's claims.
Shares in Cromwell are up 0.8 per cent to $0.89 per share at 3.18pm AEST.
Business News Australia