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| Hirco, activist investor battle over board recast | |
| BS Reporter / Mumbai March 14, 2009, 0:14 IST | |
Laxey Partners, an activist shareholder and an investor in Hirco, the AIM-listed realty fund, is battling the promoters of Hirco, the investment vehicle of the Hiranandani family, over removal of three directors. Both sides are mobilising shareholders for a possible showdown in the forthcoming extraordinary general meeting (EGM) of Hirco.
While Laxey has sought removal of three directors, including Chairman Niranjan Hiranandani, the other camp, which owns a majority stake, has threatened to pull out the entire board if any of its directors are ousted. In a letter to shareholders, Hirco has said that if any of Laxey’s proposals are passed, all the directors will resign from the board.
The resolutions “run directly against the interests of the company and are misguided...we unanimously recommend that shareholders vote against all the resolutions,” says Hirco’s letter to shareholders.
Laxey, which holds just over 10 per cent in Hirco, had in a letter dated February 20, called for an EGM to oust Hirco’s directors and replacing them with its own. Laxey proposed that its chief executive, Andrew Pegge, Michael Haxby, one of its executives, and Aled Rhys-Jones, be named directors. It also demanded that Hirco name a chairman who was independent of the Hiranandani family. Hirco plans to hold the EGM on May 6.
UK’s Standard Life and American hedge fund QVT hold 13.5 per cent and 6 per cent, respectively, in the company.
In a letter to Hirco’s shareholders, Douglas Gardner, an independent director of Hirco, said, “The board considers that Laxey’s resolutions are misguided and not in the interests of all shareholders. The board remains fully confident of the underlying inherent value of the company’s participating preference shares investments in the current development projects and firmly believes in the company’s prospects.”
Last month, Hirco had to defer a plan for reverse takeover of its holding companies as it failed to convene the shareholders’ meet within the stipulated time. Hirco had adjourned its EGM, scheduled to be held on January 16, due to stiff resistance from shareholders, led by Laxey Partners, to the proposed merger of two companies of the Hiranandani group — Hirco Developments and Hiranandani Investment Companies — with Hirco.
Laxey claimed that the restructuring plan was likely to dilute their interests and effectively cede control to the Hiranandani family. After Hirco’s board approved the merger of the two development companies of the Hiranandani group, Laxey came out with a letter that said: “No valuations for the loss-making developer, Hirco Developments, have been provided, only accounts that show it has lost money every year and has required a cash injection every year from Hiranandani.”
The Hirco group’s Executive Director, Aniruddha Joshi, told Business Standard that without Niranjan Hiranandani, the head of the group, Hirco would be a different company than what it was today. “All our projects are in India and Niranjan Hiranandani has a long experience of developing real estate in the country. Besides that, he is a big brand in India. His expertise and brand is crucial to the company, without which it will be a different company,”Joshi said.
Joshi said Laxey had not offered any strategy to add shareholder value. “It is hard to understand what Laxey wants to achieve with the change in the composition of the board. The board feels our case is strong. We are confident that other shareholders see no merit in Laxey’s proposals,'' he said.
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