20 Jun Radzyminski leads raid to topple Coventry directors
Activist investor Gabriel Radzyminski is leading a share raid on Coventry Group, the $106 million Western Australia mining supplies company, in a move designed to roll the board. Coventry is a $105.9 million Western Australian company that services and supplies parts, such as fasteners and gaskets, to companies operating industrial vehicles and machinery – mostly in the mining services sector.
Mr Radzyminski, the founder and managing director of $35 million ASX-listed investment fund Sandon Capital has buddied up with Dorsett Investments, a private investment company headed by Lorna Dorsett and based in Bunbury Western Australia to build a potentially influential stake.
On Thursday, Coventry Group announced to the ASX it received a letter from Mr Radzyminski and Ms Dorsett on Tuesday disclosing that, together, their funds now control a combined stake of 7.8 per cent.
In the letter, the raiders propose they use their significant shareholder status to force an extraordinary meeting of shareholders “to seek the appointment of some new directors” and “the removal of some current directors”.
There are currently five directors on the Coventry Group board. Executive chairman Roger Flynn, chief financial officer Keith Smith, and non-executive directors Barry Nazer, John Nickson, and Ken Perry.
On April 29, the company downgraded its full-year net profit guidance to between $1 million to $2 million. Many other companies in the mining services sector have issued downgrades in the past 12 months, although Coventry Group said part of its business was improving, instead blaming challenging conditions in the construction sector for the downgrade.
For the six months ended December 31, the company reported an interim net profit of just $200,000, after revenue fell 12.8 per cent form the previous corresponding period amid tough trading conditions. The December downgrade followed a profit warning in September.
However the company is sitting on a stash of cash, with about $53 million in cash and term deposits. The strong balance sheet position is a legacy of selling off its retail automotive parts businesses in 2010 and 2011.
The largest shareholder in the Coventry Group is Investors Mutual, controlling about 16.4 per cent, according to Bloomberg. AntonTagliaferro, the investment director of Investors Mutual confirmed the fund is a large shareholder.
Other fund managers that control large shareholdings in Coventry Group are Wilson Asset Management, and US-based fund Schroder Investment Management.
Shares in Coventry Group rose 0.7 per cent on Thursday to $2.77, compared with a 1.5 per cent jump in the broader ASX All Ordinaries Index.
Representatives from Coventry Group, Sandon Capital and Dorsett Investments, were not immediately available for comment.
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Author: Sally Rose
Published: Jun 20, 2014
Source: The Australian Financial Review