It has been an interesting reporting season so far with more than a few AGMs seeing the venting of shareholder disquiet at their Boards.
In the last month, HealthScope, Tabcorp, AMP and Telstra have all received first strikes on their remunerations reports. If there is a common theme, it would be that these boards have been
lacking Leadership and providing
poor Communications to their shareholders.
A theme that unfortunately resonates well with our Board!
For this year’s upcoming AGM, I have conducted a campaign (via HotCopper, eMail and AusPost) to raise my concerns regarding the performance and recent conduct of our board which I personally believe is not operating in our best interests.
Our board and management team has failed to produce the results that it has been promising for the last 2 years. It has been promising the “year of the deal” yet all it has done is dilute our holdings with 3 major capital raisings and produced
NO deals.
Recently, the Board released to the ASX its Outlook and Investor Presentation. I will admit, to date, it’s the best looking presentation Cynata has produced. The positives being:
• It is an easy to understand presentation
• Provides an update and some sort of progress for each individual treatment target
• Outlines the next steps for each treatment target
• Outlines the potential market for each treatment target
• Clears up some of the Japanese “rumours”
• Correct the recent poor choice of words regarding funding for the next few months
But really, all of this is already known. This presentation just brings together all the fragmented ASX announcements and presents them in a more coherent fashion. It’s just a smoke screen to placate those sitting on the fence who are yet to decide how they will vote on the resolutions put to us at this AGM.
Don’t be fooled!
This is a similar strategy the Board used when they created another smoke screen 2 weeks out from the vote on the loans to the directors regarding the escrow agreement for ½ of the shares issued to them.
The most damning bit of information from this presentation resides in slide 37 – Key upcoming milestones. In it the last runway called “Commercials”, which states “Cynata board and management seek and assess partnering and licencing opportunities on an ongoing basis and will announce material developments as they arise”. It spans the entire timeframe from H1 CY2018 to H2 CY2019, but in fact this has spanned the last 3 years.
Now ask yourself what material announcements pertaining to partnering and licencing opportunities has there been in the last 3 years. None are positive. One was Negative, Apceth handed their option back to us. The other is still hopeful, that FujiFilm exercises its option.
Really after three years this is where we stand on the commercial front?
Please vote with me at the next AGM
Through this correspondence I want to encourage you to vote in the upcoming AGM.
In particular there are two resolutions I hope for you to vote
NO on.
Resolution 1: the adoption of the Remuneration Report –
vote NO
With 25% of the voting shareholders (Noting the Directors can’t vote on this) this is the best avenue to express out displeasure with the board. Such a vote would achieve a “First Strike” and likely draw worthwhile media attention.
By demonstrating that 25% of the voting shareholders are displeased with the board and its management, I hope that the current culture will change without the need to remove some or all the board in the future.
Resolution 2: the Re-election of Dr Stewart Washer as a Director –
Abstain from voting
It is not my intention to remove any Directors, just to make them all aware we are not happy with their recent performance and that we expect them to improve.
Resolution 3: the approval of an additional 10% Placement Facility –
vote NO
My major concern here is that from the recent extraordinary General meeting, (just 8 weeks ago) to approve loans to the Directors, the existing placement facility was topped up so that the company NOW already has the ability to place 15% of the company’s shares to any third party. This was the third resolution of that meeting.
Now, at this up-coming AGM, we are being asked to provide the Company with an additional 10% Placement Facility.
My concern is WHY does the Company need a 25% Placement Facility? This is not normal practice, and if used, has the potential to further dilute our share value significantly. Do they really need 25% at their disposal? And what for? I believe 25% is far too high.
This is a special resolution and only requires 25% of the voting shareholders to get this rejected. Unlike Resolution 1, the Directors can vote on this, so it will require a greater number of shareholders to vote for this to be defeated.
So
please vote NO, to this resolution, no matter how small your holdings.
Beyond this AGM and an End Game
I have previously advised the board and its management team that I would be conducting this campaign.
In that correspondence I advised I would be looking for likeminded independent shareholders to join me and make it clear our intention to hold ground on several fronts. These being the following and I quote:
“
• No further dilution of the current shareholders.
• Any future equity raising’s will be done via a renounceable rights issue entitlement to
ALL shareholders; and
• Rejection of any takeover offer that is less than
$7.50; and
•
No future company loans offered to directors to provide personal finance.
”
I hope you agree and are willing to join me.
If we succeed, I hope the board and the management have the maturity and self-belief to change our course, not accept a lowball takeover and aim to become a great Australian company. To become a company that has a Licencing Program with many large international Pharmaceutical companies, which are mass producing the stem cell cures of many diseases and medical conditions that currently inflict this world. All this being done on our Cymerus technology.
Finally, I am happy to discuss this further with you if you wish. My email address is
[email protected]
You can vote and or change your vote online up until 11:00am on Tuesday 13 November 2018. This can be done at:
https://investor.automic.com.au/#/loginsah
Kind regards
Matthew McNamara
Director – Tarcoola Investment Company
(20min delay)