Shares in Oliver's Real Food (ASX: OLI) have risen more than 10 per cent today after a fierce defence from founder and chairman Jason Gunn (pictured) over management's turnaround strategy, which will be tested at a shareholder vote over the board next month.
The group will hold an extraordinary general meeting (EGM) on 26 November to vote on new board appointments, at the request of shareholders who hold around 14 per cent of Oliver's shares and are associated with a group called Gelba Pty Ltd.
This compares to Gunn's 18 per cent shareholding in the health food purveyor he established.
Gelba has nominated Dr Michael Green and Kimley Wood for director positions at Oliver's, which fell from grace from its 2017 IPO due to disappointing financial results and has been in recovery mode for more than 18 months.
The liquidity-light company's strategy has transformed with the help of two deals to expand courtesy of a partnership with UK-owned EG Group, including its 'Oliver's Food To Go' (OFTG) outlets at EG-owned petrol stations in Australia and a master franchise deal with the multinational.
Against the backdrop of half its stores being closed in Victoria due to coronavirus-related restrictions, Oliver's reported a 40 per cent fall in sales for the September quarter but net operating cash was still positive at $243,000.
Like so many companies around the country, Oliver's would have been in the red if it weren't for JobKeeper and other government-backed incentives, and it expects to continue on the wage subsidy as well as rent relief.
This performance does not pass muster according to the requisitioning shareholders, who argue for an independent chairman and have called for improved performance and new ideas from the Oliver's leadership.
In a letter to shareholders, Gunn has urged them not to vote for the new directors and lambasted the Gelba-affiliated shareholders alleging one of their nominated directors is not independent himself.
A lack of independent directorship is one of the arguments in the rebel shareholder's case against the current board.
"Oliver's notes that Dr Green is the brother of Mr Martin Green, with a background as an academic in an unrelated field," Gunn says.
"He is also a director and shareholder of Gelba. His appointment would not increase the level of independence on the Board and is inconsistent with the rationale of the s249D's," he says, in reference to section 249D of the Corporations Act 2001 under which the EGM has been called.
Gunn claims Kimley Wood's public service background in the utility sectors would be "even less likely to add value or transfer easily to any small, hands-on, commercially focused, listed board in the food services sector".
"It is regrettable that your Company is being forced to spend valuable time and resources on this EGM when there is so much work to do in navigating the business through this challenging economic environment that we are experiencing, diverting resources from the substantial opportunities we fought to deliver for you in 2020," he says.
The company chairman has welcomed shareholder feedback and claims he is ready to respond and listen to their feedback, but he questioned the need for some 130 email communications from Martin Green on behalf of Gelba since March 2019.
"Fifty (50) of these have been over the past 10 months. This is in addition to several letters received from the solicitors representing Gelba, telephone conversations and face to face meetings," he says.
"Mr Green and Gelba have always received a timely, courteous and appropriate response from the Board, and in particular from Nicholas Dower when Chairman, and myself as Founder, CEO, and now chairman.
"There is a point however where such contact shifts from being helpful and constructive to being intrusive and demanding, bordering on harassment."
Investors seem encouraged by the founder's defence, with OLI shares up 10.71 per cent at $0.062 at 2:04pm AEDT.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia