Wednesday, April 24, 2024

NZSA weighs in on PGG Wrightson board battle

Neal Wallace
‘One of the worst cases of board interference in the last few years,’ says Shareholders’ Association.
Reading Time: 2 minutes

The shareholder battle for control of the PGG Wrightson board has escalated.

The New Zealand Shareholders’ Association (NZSA) has lodged a resolution it wants considered at a looming special shareholder’s meeting to counter proposed board changes it said will cement control by the company’s largest shareholder, Agria.

Singapore-based Agria owns 44.3% of PGG Wrightson (PGW) and last month issued a notice proposing the removal of current directors Garry Moore, Sarah Brown and Charlotte Severne, and replacing them with Alan Lai, Wilson Liu, Vena Crawley and Traci Houpapa.

No date has yet been set for the meeting.

Three days after Agria issued its request for a meeting, a majority of the board elected independent director Moore as chair, replacing Agria-appointed director U Kean Seng who had been acting chair since last July. He remains an independent director.

Moore announced at the time that the board had invited Agria to “re-engage in good faith discussions in order to explore options for a more constructive outcome”.

“The board is mindful of its duties to act in the best interests of the company while taking into account the interests of all shareholders.” 

In a letter to shareholders on Friday, March 8, NZSA chief executive Oliver Mander says Agria’s proposed changes would be detrimental to smaller PGW shareholders, labelling the issue “one of the worst cases of board interference by a majority shareholder in the last few years”.

“A successful vote in favour of these proposed resolutions will result in an increase to the size of PGW’s board from the current five directors to six, comprising two directors as direct representatives of Agria and four additional directors, three of whom will have been nominated by Agria,”  the letter says.

The association is seeking to mobilise minority shareholders and has proposed counter resolutions for inclusion in PGW’s constitution.

That includes forbidding a controlling shareholder, with greater than 30% of shares, from voting on the election or re-election of independent directors.

It also calls for the removal of independent director Meng Foon, appointed in July 2022.

The current board consists of chair Moore (independent), Sarah Brown (independent), Foon, Seng and Severne (independent).

In the PGW 2023 annual report, six directors were listed: those listed above plus Lee Joo Hai representing Agria, who subsequently retired.

The NZSA said the changes will reduce the board’s independence, shareholders have not been given reasons for the changes and it raises concerns about the historical conduct of several Agria representatives.

That includes allegations made against former chair Lee Joo Hai in Singapore that resulted in his arrest in 2023 and settlements reached by Alan Lai with the US Securities and Exchange Commission and NZ Overseas Investment Office in 2018.

The association also notes that PGW has increased debt in recent years to maintain dividend payments, which it warns could be accentuated by a board dominated by Agria directors.

In a statement to the NZ Stock Exchange, the PGW board said it will meet to consider whether to include the NZSA-sponsored resolutions.

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