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The board at Bellamy's, which is expected to provide an update to the ASX this Friday, is being challenged. Kate Geraghty
Graeme Cureton, the former Guinness Peat Group executive director and initial Bellamy's Australia investor, says he backs the board spill push being led by fellow Bellamy's shareholder, Tasmanian entrepreneur Jan Cameron.
The Rattoon Holdings chairman and top 20 Bellamy's shareholder also said he would be willing to put his hand into his own pocket to help fund the troubled Launceston-based company, which is expected to update the market on Friday after five weeks of suspension from the ASX.
Ms Cameron, who holds a direct interest of 2 per cent in Bellamy's and once sat on its board, has become the voice of a group of shareholders which claims to have support of about 35 per cent of the register. They are looking to dump non-executive directors Launa Inman, Patria Mann, Charles Sitch, and Michael Wadley, but support Bellamy's chief executive Laura McBain and chairman Rob Woolley, for now.
"I'm supportive of Jan. We do not want to see Laura McBain go. [But] we need to see the balance sheet come out and see how the negotiations are going with both Fonterra and Bega," Mr Cureton told The Australian Financial Review.
Bellamy's is in talks with its suppliers, Bega Cheese and Fonterra, over its 'take or pay' contracts, which are over a five year period. It faces the unenviable task of needing to shift volumes of its infant formula while taking additional supply due to its obligations.
Mr Cureton was an initial investor along with other high-net-worth backers Bruce Neill and Ms Cameron. They invested into Tasmanian Pure Foods, an investment group set up by Mr Woolley, which bought the Bellamy's assets in 2007.
"I'm happy to go forward as a shareholder ... I'm happy to put in more money, as long as any raising is with current shareholders," Mr Cureton said.
The Financial Review revealed last week that a boardroom split over support for Ms McBain was at the centre of the board spill push by the rebel shareholder group, which includes the Black Prince Private Foundation that controls 14.5 per cent of the company.
While sources close to the company said a capital raising was unlikely, other industry players believe Bellamy's is facing a short-term working capital crisis.
Mr Cureton said: "I don't think the company is broke. It's a good business. Everyone makes mistakes, Laura has got so much IP ... and if the non-executive directors are pushing to get rid of her, that's dumb."
Earlier in December, Bellamy's said it had been hit by a build-up of formula caused by changes to Chinese import regulations and lower sales during mega Chinese shopping event, Singles Day.
Bellamy's inventory nearly doubled in fiscal 2016 due to the addition of a second manufacturing partner, Fonterra, and the ingredients required to support this initiative, as well as levels of finished goods to support the growing sales of the business.
"The investment into our supply chain through the building of raw materials inventory is a measured and deliberate one," Bellamy's said in its annual report.
At fiscal year end, Bellamy's was debt free and had $32 million of net cash.
Kathmandu founder Ms Cameron said the company is "potentially needing $10 to $20 million in financing some time this year but I have not seen financials to support this".
"The other thing that alarmed me was I've been told the company has spent $5 million on consultants this last year which seems an extraordinary amount of money. I'm also really concerned about pending class actions, which is a major distraction," Ms Cameron said.
Ms Cameron claimed she offered to help fund the company, which was rejected by the board.
The four non-executive directors have refused to stand down, and Mr Woolley has said that is not in best interests of all shareholders.
The dissident shareholder group has proposed that Ms Cameron, Vaughan Webber, Hong Kong consultant Chen Wei-Chen and Rodd Peters join the board. Mr Peters represents Black Prince, but also has been Ms Cameron's lawyer on various dealings. Mr Webber helped float Bellamy's in 2014.
They plan to meet this week to discuss their next move.
Ms Cameron has denied any association with Black Prince. "I've had nothing to do with setting up Black Prince. They were not a shareholder pre-float," she said.
Black Prince was set up by investment trust company Trustmoore, which has offices in tax havens around the world. Black Prince is controlled by Trustmoore Curacao NV, located in the Dutch Antilles.
Trustmoore co-founder George van Zinnicq Bergmann did not deny that Black Prince was related to Ms Cameron, saying: "The nature of our client relationships is one of undisputable confidentiality."
However, a source with knowledge of local share registers said although Ms Cameron denies being linked to Black Prince "she is known in the market and to Bellamy's as the beneficial owner" of the Black Prince stake.
"There is nothing personal in this," Mr Cureton said. "This is just business, end of story. Rob Woolley and I remain good friends."
BAL Price at posting:
$6.68 Sentiment: Buy Disclosure: Held
