Bubs shares tankIf chair Katrina Rathie’s refreshed strategy for...

Bubs shares tank

If chair Katrina Rathie’s refreshed strategy for Bubs is so good, then why did shares in the goat-milk infant formula maker tank 13 per cent on Thursday after she narrowly survived a board spill?

After all, investors normally embrace certainty. But instead of lapping up the first-time ASX-listed chair’s every word, they dumped the stock like sour milk down the sink.

The answer may be in the stellar run-up Bubs had before the spill. About 12 per cent of the company’s stock was traded in the past few weeks before the meeting, held at the Radisson Blu Plaza Hotel in Sydney – a long way from Bubs’ Dandenong HQ but close to Rathie’s own Styne Park-facing Double Bay base.

Rathie and her fellow directors survived with 62 per cent of the shareholder vote. Every vote counted.

Bubs chair Katrina Rathie.

If they didn’t have the support of Bubs’s biggest shareholder, Alibaba-backed private equity outfit C2 Capital – which has a 10 per cent stake – it would have been a 50/50 split and Rathie may have found herself brushing up her CV, which also includes the very public furore that engulfed Sydney’s Cranbrook School council. We won’t go into that now.

What we do know is team Rathie went all out when Bubs’s founder and its departed chief executive Kristy Carr and former executive chairman Dennis Lin requisitioned the extraordinary general meeting.

The money Bubs’s board spent on advisers was enough to prompt the company’s second biggest shareholder and Chemist Warehouse billionaire Jack Gance to blow a head gasket.

“Why would you spend millions of dollars fighting this? Why would you spend so much money? I believe it was $5m. Was this the amount that was spent?” Gance bellowed.

Rathie replied she was “not sure”. “What are you referring to?”

“The money that was spent on the campaign,” Gance replied. “The dismissal of Dennis and Kristy was terrible.”

Bubs ousted founder and chief executive Kristy Carr. Picture: Getty Images

At last count, Rathie – who herself was a long-time legal adviser to Carr and Lin before she was invited to join the board – had engaged two PR firms, corporate undertaker McGrathNicol and everyone’s favourite agribusiness deal-maker, David Williams.

Perhaps that’s why one of Rathie’s PR minders objected to one of our photographers taking a picture of her and Williams ahead of the meeting?

Rather they wanted their own shot from their snapper of the board showing a united front.

While advisers don’t come cheap, Rathie sought to assure Gance that the company got value for money.

“The meeting was requisitioned and we had the responsibility to respond. I do not know the precise figure involved, but I can assure you it’s certainly not in the millions of dollars,” she said.

No time (or money) to waste, then, on celebratory drinks on Sydney Harbour post meeting.

Rathie and her fellow directors will now have to roll up their sleeves and turn the company around.

After all, she could find herself facing another spill – and writing more cheques – if little progress has been made by the company’s annual meeting, which is normally held in November.