PGC
16/09/2014 15:14
GENERAL
REL: 1514 HRS Pyne Gould Corporation Limited
GENERAL: PGC: PGC seeks board changes to reduce costs at EPIC
Tuesday 16 September 2014
PGC seeks board changes to reduce costs at EPIC
Pyne Gould Corporation ("PGC") is seeking board changes at one of its
investments - Equity Partners Infrastructure Company ("EPIC") - saying the
company needs to reduce heavy administration costs and instead focus on
minimising debt and creating shareholder value.
PGC owns approximately 27% of EPIC and is seeking the removal of two of
EPIC's three directors and their replacement with PGC's managing director
George Kerr and fellow director Russell Naylor. PGC has written to EPIC
requesting a special general meeting to vote on the issue.
Mr Kerr said EPIC is a simple company with a single investment - a minority
stake in MOTO, the United Kingdom's largest motorway service area company,
which has excellent prospects as the UK economy recovers and MOTO navigates
the restructuring of its balance sheet.
"In the interim, however, EPIC's own debt and costs need to be kept to a
minimum. PGC has serious concerns that these are getting out of control. We
know other EPIC shareholders share these concerns.
"Requesting board changes is an unusual step but it has been triggered by our
concern over EPIC's recent announcement that it has arranged a loan of
approximately $10 million (GBP5 million) for working capital purposes.
"What was not disclosed to EPIC shareholders was that this loan from Deutsche
Bank has charged all the assets of the company. There has been no coherent
explanation provided as to why the entire company has been put at risk to
fund operating costs, which appear to be predominantly payments to directors.
We do not believe that this level of costs is required to run EPIC over the
next few years, given EPIC's size and that it is non-trading holding company
with a single investment. Borrowing $10 million for three years working
capital is not, in our view, justifiable or prudent."
PGC Requisition
Mr Kerr said PGC is deeply concerned that despite receiving the requisition
of the special meeting last week, the EPIC Board have not disclosed this to
all shareholders.
"We are proposing that I and fellow PGC director Russell Naylor join EPIC's
board to work with chairman Murray Tonkin to bring costs down and drive value
uplift. Over the past two years, PGC has paid its directors standard fees,
stripped out almost all its direct administration costs, and focused entirely
on creating shareholder value. Over this period, PGC's net asset value has
improved materially. We want to replicate this model with EPIC.
"EPIC has a three person board and that is the appropriate size for the
company. PGC is comfortable with Murray Tonkin's independent oversight but
we believe the board needs highly qualified and experienced directors who
will work diligently on behalf of all shareholders to ensure the cost to
shareholders of operating EPIC is kept to a minimum. We hope shareholders
will support our efforts to reduce costs."
For more information, please contact David Lewis +64-21-976 119
End CA:00255305 For:PGC Type:GENERAL Time:2014-09-16 15:14:34
