Hi Dep
Thanks for clarifying that important point.
I called up Computershare to double check this, and they seemed somewhat flumoxed. I think you are right, however.
Going to the
Phoslock EGM page, and clicking the link, brings you to a page headed 'Computershare Online Meeting Guide', where it states '
...If you choose to participate online you will be able to view a live webcast of the meeting, ask the Directors questions
online and submit your votes in real time. To participate online visit https://meetnow.global/au on your smartphone,
tablet or computer. You will need the latest versions of Chrome, Safari, Edge or Firefox. Please ensure your browser
is compatible....However, also note this, at the bottom of the same page:
Appointed Proxies
Please contact Computershare Investor Services on +61 3 9415 4024 to request your unique email invitation link prior to the meeting day.So, shareholders who plan to vote online on the day might need to call the above number in advance of the meeting (i.e today or tomorrow).
At any cost, it would seem that those who are able to attend the meeting both online and in person have a couple more days to mull this over. In light of the serious repercussions of the vote on Thursday, there simply hasn't been enough debate or discussion here around each of the EGM resolutions.
But given that there seems to a bit more of a window for debate, I may as well take full advantage, in an attempt to stoke discussion and (hopefully) shed some light on the alternate proposals that are up for vote.
By the way, Happ, regarding your last post, I wasn't quite sure what to make of your comment re the delisting.
The current Phoslock Directors have recommended that shareholders vote in favour of resolution 1 ('Approval of Disposal of Main Undertaking') and resolution 2 ('Approval of Delisting').
According to the EGM form ('Notice of Extraordinary General Meeting/Proxy Form', 15/12/23), the first resolution needs to recieve over 50% of votes to get passed, whereas the second resolution needs 75% of votes from shareholders to get up. The other resolutions, 3-10, need a 50%+ vote.
Now, if Graeme is right about having the backing of 20 shareholders, I simply can't see how resolution number 2 is going get passed.
The unfortunate reality with these votes is that you will always find a large minority (indeed, often a majority) of shareholders who don't partake in the vote.
Many shareholders only have a small holding, and so don't feel it is worth their while to take part. Some shareholders might be new to investing, and are unacquainted with the particulars of the sharemarket. However, the main reason that shareholders don't vote is probably just on account of apathy.
That is why I can't see how resolution no. 2 is going to get passed. Newing and co probably don't need to win many shareholders over, given that there already seems to be a party of shareholders who have their back. Obviously, Newing's group is going to be opposing resolution 2, because the current board of directors need resolutions 1 and 2 to be passed for their plan to go ahead.
Newing seemed to indicate when I spoke to him that he would consider delisting the company if his group took control, but that is a seperate matter to what shareholders will be voting on in two days time.
By the way, I don't support Newings plan: my post on the weekend was aimed at providing information as to the intentions of the group that initiated the 249D action. Shareholders have precious little information to go off, and yet at time of writing, we are less than 48 hours away from the vote.
Incidently, if you are worried about Laurence Freedman taking over the company, I should point out that the former chairman has actually got a finger in both pies.
The current Chairman, David Krasnostein, falls within Freedman's orbit: the connection is via their respective daughters, Sarah and Mia, who seem to be closely connected.
However, two of the three proposed new directors also have a close association with Freedman, through the company Audio Pixels, a company in which Freedman is a major shareholder. One of the proposed directs, Fredrick Bart, has been a long standing director of that company, though I understand he resigned from his role the company recently. Freedman was also an ally of Bart in a
corporate tussle involving another company, Immunovative, back in 2019, so the association seems to go some way back.
Another of the proposed directors, Shawn Van Boheemen is also associated with Audio Pixels: He was appointed CFO of that company in July of 2023 (It is curious that this detail wasn't mentioned in the biographical details that are included at the end of the EGM form).
Anyway, the point I am making here is that it is a mistake to think that the upcomming vote is either for or against Freedman. He has had as much sway over the current Phoslock board as he will over the proposed alternative board.
On that point, I thought I might highlight something that I noticed in the recent article about Phoslock in that appeared in the SMH and the Age on the 16th of December.
The treatment of Schuitema and Freedman in the article presents an interesting contrast.
Here are the extracts in the article concerning Schuitema-
...Emails from as early as 2017 reveal Phoslock’s Chinese managers were brazen about providing benefits to Chinese government officials to buy influence.
Australian-based executives, led by managing director Robert Schuitema, were repeatedly copied into correspondence that raised red flags.There is no suggestion or evidence that Schuitema ever personally directed the payment of a bribe. But the leaked emails reveal he should have been firmly on notice that his managers in China were prepared to bend the rules in a country known to host entrenched corruption.
For instance, in September 2017, Schuitema was told by a Chinese manager via email that rather than paying employees their overtime wages, Phoslock could avoid its legal obligations by cultivating a relationship with a local government official who “will protect us” when the company crossed “red lines”.
“The employee should not force us to follow the labor law, we would be like a tied crab. They will bully the foreign company,” the Phoslock manager told Schuitema when justifying a plan to provide benefits to the official.
Schuitema was also told in writing that gift cards would be used to pay just over $1200 to the “director of labor union bureau” and “to the leader of the police station” after 12 sacked employees arrived at a Phoslock site demanding unpaid wages.
Leaked emails document a payment of $21,000 – covered up via a backdated invoice – to secure an inflated Chinese government refund on an investment of $100,000. Emails reveal the $21,000 was paid “for relationships” with an “officer [who] can help us to get the money back”.“Obviously they need commission on this task,” stated the email from a Phoslock manager in China.
In response to this email, Schuitema replied: “I understand – approved.”Here is another extract on the same subject further on in the text, which is based on one of Schuitema's leaked emails:
...Schuitema insisted via text message to this masthead that the performance targets for the options were met in a “very transparent” fashion. But Schuitema’s leaked emails suggest he was privately concerned about why people not employed by the Australian company were making significant profits. In one email, Schuitema wrote: “The intention of the options is to reward and retain Beijing employees ... [this] is not happening.”
There is no suggestion Schuitema knew who the final recipients of the options were, but the leaked internal company files suggest that another influential company figure did. ...I've pasted the extracts from the article concerning Freeman, below-
...One of them was Phoslock’s most influential backer, Australian business veteran Laurence Freedman. Freedman’s appointment as the chairman of Phoslock in 2011 was the start of a new chapter in an already storied life of great wealth and visionary business acumen.Freedman was a past master at commercialising innovation, one of a pair of dashing businessmen who “democratised sharemarket investing while riding the 1980s bull market” by giving regular investors the chance to access complex financial products.
His already significant personal fortune expanded after he sold his shares in the Ten Network in the mid-2000s, having guided it out of receivership years earlier. Laurence Freedman speaking at the Phoslock AGM in 2021.
By 2019, he was Phoslock’s greatest spruiker, proselytising the company’s mission to resuscitate polluted lakes and waterways all over the globe and citing the clean-up of The Serpentine in London’s Hyde Park before the 2012 Olympics. According to Freedman, a huge pipeline of work for the company across China’s vast network of waterways beckoned.The market lapped up Freedman’s vision, with headlines describing Phoslock “riding a surging wave” as its China business grew. Its stock price tripled in value in the first half of 2019 as its shareholder registry increased from 3000 to more than 6000.
By October 2019, it was one of the top 300 publicly listed companies in Australia and was predicted to soon join the ranks of the ASX 200.The company’s success was also evident in the waters of Xingyun Lake. There, it had, according to Phoslock, delivered “outstanding results” while proving to Chinese authorities that the product was “simple to apply, with no adverse effects on fish, plant life or humans”.“We are helping China rejuvenate and fix the country’s water bodies through ethical and sustainable treatment solutions,” Freedman told business reporters in 2019. Freedman may not have known it, but investors weren’t being told everything about Phoslock. Others in the company held dark secrets...
....There is no evidence or suggestion that Freedman knew of this apparent bribery. In fact, the Chinese manager claimed the kickbacks were disguised as a payment for labour hire. Still, there were warning signs for those running and overseeing the Australian business...Notice the contrast? '.
..Australian-based executives, led by managing director Robert Schuitema, were repeatedly copied into correspondence that raised red flags..' on the one hand, and:
'..
.There is no evidence or suggestion that Freedman knew of this apparent bribery. In fact, the Chinese manager claimed the kickbacks were disguised as a payment for labour hire. Still, there were warning signs for those running and overseeing the Australian business...' on the other.
Reading the article, Freedman comes across as akin to a kindly old fuddy-duddy, who was led astray by the conniving duo, Schuitema and Zhang. You have to wonder, why does Freedman get given the kid-gloves treatment?
Any long-term shareholder in this company, or at least any who have been paying attention, would be aware that Freedman bears as much responsibility for the 'China debacle' as Schuitema.
He was the Chairman of the company when the problems in China took place, and along with Schuitema and Zhang, he sold a stack of his shares in 2019, right at the top when the share price was well above $1. And who can forget Freedman's
interview with Alan Kohler in 2019, in which he touted the company as a future 'unicorn'?
The article also curiously neglects to mention that a relative of Freedman, Michael Kotowicz, was Phoslock's investment relations manager during the expansion of Phoslock into China.
Last month, when I was reading one of the lines in the same article, I assumed that Kotowicz was about to be outed: '..
.Even more curious was the identity of some of those who received what would become very valuable shareholdings. Some option holders became millionaires, with one pocketing a gain in share value of $4.5 million. All up, option holders made at least $22 million profit....'And yet, in the section that followed, his name didn't even rate a mention.It focused only on the options given to various Chinese employee.
In fact, Kotowicz was granted a stack of options just as Phoslock was expanding into China (See 'General Meeting Proxy Form', dated 15/05/17- resolution no. 6 concerned Kotowisz's company, Serenity Holdings).
Note that this was in the very same meeting in which the performance options to the Chinese were voted for (resolutions no 5 and no 3 in the above announcements).
I wonder why, whoever leaked the emails, felt the need to downplay Freedman's role in the debacle, and why they seem to have glossed over the generous options that were given to Freedman's relative, Kotowisz, at the very same time those options were given out to the Chinese employees?
The point I am making here, is that the individual who leaked the sensitive emails took steps to minimize embarrassment for Freedman.
In other words, the very fact that the article glosses over Freeman's involvement makes it clear that the culprit behind the leaks was someone who currently works at Phoslock, and it would have to be someone at a senior level, senior enough to be able to gain access the emails of a former MD.
It is clear to me that the leaking of the internal emails was a calculated move by the management, aimed at influencing the vote on Thurday.
I don't think that was the only objective: I think McKinnon and Parker are also trying to wash their hands clean of the problems at Phoslock, as is evident in the following passages in the article, where the CEO and CFO are presented as corruption-fighting superheros:
...Most government capital projects in China come with commissions,” the Phoslock Chinese manager said in his October 12 email to McKinnon.“This is illegal but it exists naturally … they need cash to pay,” he continued, adopting the tone of a teacher chiding an ignorant child. McKinnon responded in kind: “I want to state clearly, we will not be entering or be part of any illegal deals, commissions or other forms of payoffs. This is not acceptable in any way, and for a publicly listed company in Australia completely unauthorised. It will not be tolerated.” McKinnon and Phoslock’s chief financial officer, Matt Parker, promptly sacked the manager...Try reading that alleged quote from McKinnon out loud while keeping a straight face.
Nowhere in the article is there mention of McKinnon and Parker's substantial financial gains from Phoslock. McKinnon has earned over $2.5 million in salary during his four year tenure at Phoslock, while Parker has accrued around $1.5 million, including substantial bonuses distributed in 2021 and 2022.
This isn't incidental, as the excessive salaries of the management directly impacts the size of the proposed capital return ('Resolution 1'). When the company is wound up, the executives will receive termination payments, and thus the larger the salary of the executive, the less there will be leftover for shareholders.
If the two most senior executives had been paid some 20% less over their time in Phoslock, they would have still been earning good coin , but shareholders would likely be looking at a final capital return somewhere north of 2c per share.
This is why I am opposed to the proposed wind-up of the company. I just don't think the capital return is high enough.
This is partly due to a lack of thrift on the part of the management over the past four years, however, I also don't think it possible to get a good price for Phoslock's assets given that, as a listed company, the buyers already know that the management have given up the ghost. They've said as much in the announcements since August of last year.
So is Newing's plan any better?
This is just my view, but I'm not really sold on Newing's plan. I think there are ways Phoslock could go forward, but I don't see what is being proposed by the alternate board as being the best option. From my perspective, it seems quite unimaginative and tepid.
I think a better option would be to split the company into two new entities, the first called 'Phoslock New World' and the second 'Phoslock International'. The first business would comprise of North and South America, and Australia and New Zealand. The second company would consist of China and the rest of the world.
Under this plan, the company would sell off all the assets of the Phoslock International entity, and use it to pay down the liabilities associated with the New World company. Going forward, the new company would just be focused on the America's and Australasia. It would be a smaller, nimbler and leaner company, and given that it would no longer include China, it would give the company a chance to turn over a new leaf, which I think the company needs to do to entice shareholders into partaking in a new capital raising to help the new, trimmed-down company find its feet.
I think that would be the ideal scenario, but unfortunately, as I am not behind the 249D motion, it just represents a thought-bubble.
So how should shareholders vote?
As mentioned earlier, I suspect Newing and co have the numbers to block resolutions 1 and 2.
Where the unaffiliated shareholders might have more influence, I feel, is in resolution no 3-9.
Bear in mind, that shareholders don't have to vote for Bart, Newing and Van Boheemen, they can decide to vote on a board composed of old and new directors if they so choose.
And I think they should so choose, because neither of the proposed motions are ideal for shareholders, and also because I think shareholders should make an effort to minimise the influence of Freedman over the company.
My suggestion is as follows: Firstly, vote against resolution no 8: Removal of Robert Prosser as director.
Of all the directors, Prosser is probably the one who is most likely to be outside of Freedman's orbit. In all likelihood, he got his job as a Phoslock director via his association with Krasnostein, as both were previously directors at the Breast Cancer Association.
Secondly, I'd vote for Newing (Resolution 5). Among the proposed new directors, Newing is probably the one who is the most independent. He's already made a name for himself and won't be at the beck and call of Freedman.
At 74 years young, Newing is a spring chicken compared to the guy currently at the helm of the most powerful country in the world. Moreover, the fact that he lacks experience as a company director isn't a significant concern for me, especially considering the track record of the previous highly experienced Phoslock directors, who, to be frank, were quite hopeless.
In summary, I believe Newing's blend of independence and relative youth makes him a strong contender, which earns him a spot on my list.
As for the third director, that is a tough call.
Bart is too close to Freedman; same with Krasnostein. And I can't recommend Shananhan, in light of her unprofessional conduct during her time as a director.
That leaves Van Boheemen and McKinnon.
Here, I'd tentatively back McKinnon, but mainly out of sympathy. His performance at Phoslock has been so lackluster that he might find it challenging to nab another job. However, either candidate could be a suitable choice as the 'least worst option'.
In summary, given that neither of the proposals being presented by the current or alternative directors are attractive to most shareholders, the best course of action for shareholders is to shake things up, by voting for a board composed of some of the old directors and some of the new. Of the old directors, Prosser is probably the best choice, as he is the one most outside of Freedman's orbit, whereas Newing is fairly independent, and so I think here the Freedman factor is less of a concern.
Before I wrap up this post, I feel obliged to tack on a cautionary note.
The first question I put to Newing during our phone conversation last week, was 'Are you still a Phoslock shareholder?'
He responded by stating that he had sold all his remaining shares last year. I didn't mention this in my previous post, as in Newing's bio in the Annexure at the end of the 'Notice of Extraordinary General Meeting/Proxy Form', it already mentioned that he is no longer a shareholder in the company, and I thus felt there was no need to reiterate the point.
In light of this, I was rather surprised to read the following in a Hotcopper post earlier this week-
...Also contrary to the annexure, his company Newvest is the 8th largest shareholder in PET, holding 6,099,860 shares...So, was Newing lying to me? As well as on the biography he submitted?
That seemed a little implausible to me, so I did some digging, to work out where that poster got that 6,099,860 holding figure from.
I soon tracked it down. The figure quoted above has been taken directly from page 86 of the last Annual Report ('PET Annual Report, FY 2022, 14/04/2023')
That report was released eight months ago, and thus there has been a bit of water under the bridge since then. But then, I noticed a note at the top of the same page:
'...the shareholder information set out below was applicable at 2 March, 2022...' So, in other words, here you have a poster making an authoritative claim that Newing has lied on the annexure, based on information that is over 20 months out of date.
Apart from the fact this poster is relying on out of date information, the argument doesn't make any sense. Why would Newing claim not to be a holder? Given his objective is to win over shareholders, wouldn't he gain more sympathy by stating that he was also a shareholder?
I am highlighting this to illustrate the fact there is deliberate misinformation being circulated on this forum.
This isn't the only example, by the way.
The line below is from another post by the same individual, back on the 16/12/23, (which, incidently, was the same day that the story on Phoslock was published in the press):
...My instincts tell me this is an AFP leak (personal opinion), we seem to be seeing "alledged" police leaking more & more often, just saying....As outlined earlier in this post, there is little doubt that the source of the leak was from the senior management at Phoslock, this is fairly obvious. The individual responsible for the leak took deliberate steps to safeguard Freedman's reputation while also presenting McKinnon and Parker in a favorable light.
Apart from that, does anyone seriously think anyone at the AFP would really care about the sordid goings on is a shitey little company like Phoslock?
I wonder what would motivate someone to go on Hotcopper, on the very same day the reports about the company were published in the media, and write a post that attempts to deflect attention from the obvious culprits behind the leaks?
I get a sense that some individuals who are following this forum have been getting played for fools over recent weeks.
Pretty much anything that is posted on Hotcopper needs to be taken with a grain of salt, and with a critical EGM vote just a couple of days away, a little more circumspection is called for, surely.
(20min delay)