Corporate raiders come knocking at Yowie's door
Written on the 30 July 2019 by David Simmons
A pair of notorious corporate raiders behind two unsuccessful attempts to buy out confectioner Yowie (ASX: YOW) are taking matters into their own hands.
Farooq Khan and Nicholas Bolton have launched an attempt to have chairman Louis Carroll and executive director Glen Watts removed from the company board.
It is the latest play from the infamous duo with a reputation for acquiring major companies at a bargain, having already tried to take over Yowie in recent months through Keybridge Capital (ASX: KBC) and Aurora.
Bolton especially has a reputation for being a corporate raider. At 26 years old he took on Macquarie by snapping up 1 cent shares during the $4.9 billion BrisConnections float.
In 2015 he was disqualified from managing corporations for three years following his involvement in the failure of 13 companies.
The disqualification follows an ASIC investigation into Australian Style Investments which found Bolton breached his duties as a director and that he failed to hold adequate records to explain the company's financial position.
Across the 13 companies, liquidators found more than $25 million was owed to creditors.
In 2017 he partnered up with Perth's Farooq Khan to raid Molopo Energy, a $35 million company with more than $57 million in cash on its balance sheet.
A similar situation may be unfolding now with Yowie, another company that has more money in its pockets than it is worth on paper. Today the group emphasised it had US$16 million (AUD$23 million) in cash reserves, and this compares to a market cap of close to $17 million.
Both Keybridge and Aurora offered nine cents per share for Yowie; offers that were dismissed by the confectioner's board as "ridiculous", and were withdrawn by the investment groups shortly after.
Their latest attempt to exert control comes in the form of trying to boot the chairman and an executive director off of the board.
The company appears irritated by the continued efforts of Bolton and Khan to make changes at Yowie.
"Responding to all of these activities is distracting, time consuming and expensive," says Yowie.
The board has, not surprisingly, recommended shareholders reject the proposal to boot Watts and Carroll, citing the less than favourable reputation Keybridge has developed.
On 5 June 2019 Yowie says it received a request to convene a general meeting from Keybridge, at the time a 6.5 per cent shareholder in Yowie.
Since then Keybridge has been suspended from the ASX, become embroiled in litigation with entities associated with Bolton, is itself the subject of a takeover bid, and apparently has a deadlocked board.
Keybridge has declined to provide reasons as to why Carroll and Watts should be removed as directors.
Additionally, Yowie says it is in fine financial health. The annual cash 'burn rate' has been reduced by 58 per cent and very little cash is being used in day to day operations; in fact working capital requirements in this financial year will consume less than 10 per cent of its cash reserves.
Business News Australia
Author: David Simmons