From The Australian :Bubs chair Katrina Rathie and her fellow...

From The Australian :

Bubs chair Katrina Rathie and her fellow directors at the goatmilk-focused infant formula company have survived a board spill.

But their positions remain on shaky ground, with them winningonly 62 per cent of shareholders in pre-voting. The now face the tough task ofturning around Bubs’s fortunes and share price - which dived 13 per cent to 20cfollowing the vote on Thursday - before the company’s annual meeting later thisyear.

“I believe that all parties must unanimously accept the outcomeof each resolution – whatever that may be, even if it’s not their preferredoutcome – and move on in the best interests of the company,” Ms Rathie toldshareholders at the meeting in Sydney.

But one shareholder, John Ayliffe, voiced his anger at Ms Rathieand other directors when she closed the meeting after 28 minutes.

“Chairman, are you not allowing anyone to speak,” Mr Ayliffesaid. Ms Rathie had invited shareholder questions after each of the meeting’sresolutions.

“There are a lot of very angry people here. I think this is acomplete sham. There are 28,000 shareholders and we’re looking at more than400,000 votes. How has that happened? The mums and dad in this company havebeen short-changed. You have ripped us off, and I don’t wish you well.”

Ms Rathie told the shareholder that the meeting had closed, andshe had heard him “loud and clear”.

Earlier in the meeting, Chemist Warehouse chairman and Bubs’ssecond-biggest shareholder, Jack Gance, questioned the amount of money that MsRathie had fellow directors spent defending their positions ahead of the spill.

Bubs founder and sacked chief executive Kristy Carr and formerexecutive chairman Dennis Lin spearheaded the push to oust the board.

I’ve watched Bubs’s growth and activities for many years, and wewere one of the first to put Bubs into pharmacy,” Mr Gance said.

“I’ve seen the success in America, which I think wasoutstanding. I’ve seen the activities in China. I really know the businesspretty well. My question is why would you spend millions of dollars fightingthis? Why would you spend so much money. I believe it was $5m. Was this theamount that was spent?”

Ms Rathie replied that was she “not sure”. “What are youreferring to?”

Mr Gance said: “The money that was spent on the campaign. Thedismissal of Dennis and Kristy was terrible”.

“I’ve personally spoken to you about it and asked the reasonswhy they were dismissed, but I really didn’t get an answer that I wascomfortable with. I’m just wondering whether this is the way the business willcontinue.”

Ms Rathie told Mr Gance that she “respected his right as Bubs’ssecond-biggest shareholder” to voice his opinions.

“The meeting was requisitioned and we had the responsibility torespond. I do not know the precise figure involved but I can assure you it’scertainly not in the millions of dollars.”

The meeting comes two years after former Blackmores chair Anne Templeman-Jones was elected to the company’s board with the support of 58 per cent of the shareholders.

A year later, Ms Templeman-Jones resigned from the company,which was later sold to Japanese brewing giant Kirin.

Almost 62 per cent of Bubs shareholders also rejected Ms Carrand Mr Lin’s push to install former A2 Milk Asia Pacific boss Peter Nathan asCEO and former Elders deputy chair James Jackson as chairman.

Bubs’s board had the support of the company’s biggestshareholder, Alibaba-backed private equity firm C2 Capital, which has a 10 percent stake.

Mr Jackson said if C2 Capital’s holding was removed from thepoll, the result would be closer to 50/50.

“It was actually quite a close vote in the end and they (thecurrent board) just got over the line. They had that 0 per cent shareholder intheir pocket to begin with, so the balance of the register’s divided on backingthe existing board,” Mr Jackson said.

“At the same time, about 12 per cent of the shares have tradedsince the meeting was called and so it’s not implausible that someone or anumber of people have bought a stake there to support the existing board forother reasons.”

After the vote, Bubs shares fell more than 13 per cent to 20c,extending losses to more than 85 per cent since its high of $1.39 in May 2019.

Mr Jackson said the ‘Save the Bubs’ group, which was led by MsCarr and Dennis Lin, would “observe” the current board’s performance in thelead up to the company’s annual meeting, which is normally held in November.

“I’m sure that the board are going to have their hands full,basically, in turning the business around,” Mr Jackson, saying the group hadn’truled in or out a future spill.

“Clearly, there are quite a lot of shareholders who are notcomfortable with the existing board at this point and who knows how that willmanifest itself going forward.”

The board spill has been an ugly corporate battle. Bubs is suingMs Carr and Mr Lin, accusing the pair of “undisciplined expenses”, includingpaying former Treasurer Joe Hockey’s Bondi Partners a bonus of $US900,000($1.35m) – after successfully guiding the company to US FDA approval – withoutdisclosing it to the board.

Analysis from McGrathNicol commissioned by Bubs shows that MsCarr and Mr Lin spent a total of $1.4m on expenses from January 1, 2022 to May31, 2023.

Court documents allege that Ms Carr spent $12,050 on five piecesof women’s clothing at Giorgio Armani in Melbourne on or about June 6 lastyear. Other expenses included $312 on an 80-minute massage at the Ritz Carltonin California last January; and $3807 on “personal flights” from Washington, USto Athens, Greece to “attend a cruise across the Greek Islands”.

Ms Carr rejected the allegations, saying that they were “untrue,baseless and are a transparent attempt to divert the attention of shareholdersfrom the current board’s lack of a clear and articulable plan for the BubsAustralia business”.

She and Mr Lin last month launched their own legal actionagainst Bubs’ board, alleging bullying, harassment and that the company failedto provide a safe workplace.

Ms Rathie said at the start of the extraordinary generalmeeting: “I would like to publicly thank and acknowledge Kristy Carr and DennisLin for their hard work, energy and entrepreneurial spirit in creating Bubs’sbrand and business”.

“We wish them all the best in their new venture together,” MsRathie said.

Ms Carr and Mr Lin have launched a new advisory business calledTAKE Global.