McGrath shares hit record low as founder looks for board replacements
Written on the 13 February 2018 by Ben Hall
Shares in ASX-listed real estate business McGrath (ASX: MEA) continue to fall as its price dropped nearly six per cent on Monday to a record low of $0.42 after three board members who resigned announced their imminent leaving dates.
Late on Friday, McGrath announced on the ASX that chairman Cass O'Connor and her fellow non-executive directors Elizabeth Crouch and Cath Rogers will be out the door in less than a week by close of business on Monday February 19.
It leaves founder and 26 per cent shareholder John McGrath as the company's only remaining board member and means he has a week to convince at least two partners to join the board or he will be in breach of the Corporations Act.
"The outgoing directors note that they understand from John McGrath that he is well progressed in discussions with new proposed directors and have accordingly given written notice that their resignations will take effect from close of business Monday 19 February 2018 following release of the company's interim results expected to be announced on 15 February 2018," the ASX statement says.
The 54-year-old McGrath will unveil the results on Thursday and outgoing CEO Cameron Judson is expected to front up before he too departs.
Last month, the real estate business was plunged into chaos after it was announced that Judson and the entire board, with the exception John McGrath, will resign after yet another profit warning.
John McGrath took over as interim CEO after the company announced it expects full-year earnings before interest, tax, depreciation and amortisation (EBITDA) of between $5.8 million and $6.8 million.
McGrath had already revealed it did not expect to meet analyst expectations of $16.6 million in EBITDA because of slower-than-expected sales, particularly at its company owned agencies.
The company's share price has also been rocked by allegations that John McGrath has a $100 million lending facility that allegedly is funding his expensive gambling habit.
Fairfax Media has reported that McGrath is $16.2 million in debt to to the Tom Waterhouse betting company William Hill Australia. McGrath has denied this.
At around 11am AEDT, MEA shares were down a further one per cent to $0.41. The shares were priced at $2.10 ahead of its market listing in December 2015.
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Business News Australia
Author: Ben Hall