SMALL CAP MOVERS: Management Resource Solutions chairman claims pyrrhic victory in attempted boardroom coup
While boardroom tussles are nothing new in the City, shareholders in Aussie plant hire and mining services outfit, Management Resource Solutions (MRS), have claimed what could be described a pyrrhic victory for its chairman John Zorbas.
Shareholders Daniel Smith and Nigel Burton had sought to remove Zorbas and finance director Timothy Jones at a meeting on Wednesday, citing ‘questionable transactions’ and the board’s ‘indifference’ to investor concerns.
The issue had been festering since Burton and Brown left the board citing ‘repeated improper interference in the business’ by major shareholder Leon Hogan that was being supported by Zorbas, who became chairman of MRS in April 2017 after URU Metals, where he is the CEO, built up a stake in the group earlier that year.
Boardroom tussles are nothing new in the City
Hogan himself is also a major MRS investor, having picked up a nearly 8% stake in the company a few months after Zorbas’ appointment.
Ahead of the Wednesday meeting, Smith and Burton alleged that investors had ‘long been suspicious’ of the relationship between Zorbas and Hogan and that their concerns had come to a head after the company acquired Alerion, a seven-month-old drone surveying startup owned by Hogan’s long-time associate Chris Grove, for £1.32mln in March.
Smith and Burton had also previously attempted to refer a £900,000 placing last July to the City regulators after objecting to 49% of the shares being allocated to Hogan, Grove and a Canadian-Cypriot consultancy connected to Zorbas.
However, when the meeting finally took place all motions were defeated by 91mln votes to 75mln, mostly due to Hogan’s 7.9% stake backed by the personal holdings of Zorbas and Grove as well as URU’s 7.9% stake.
However, while MRS CEO Paul Brenton said he was ‘pleased’ with the result, the 33% plunge in the shares to 2.9p over the week may have left many shareholders wondering if it was worth it.
Meanwhile, it wasn’t an acquisition but a sale that caused a headache for property group Caledonian Trust after the shares tumbled 8.2% to 225p on the news that a £15mln sale of its largest property, St Margaret’s House in Edinburgh, would be delayed.
Recruiter Hydrogen Group joined the list of companies blaming Brexit uncertainty for lower demand in an update ahead of tis AGM, with the share sinking 13.8% to 71.5p in response.
Babestation owner Cellcast was also left red-faced after worries that new Kenyan gambling laws could dent its overseas business sent the shares down 29% to 0.5p.
Elsewhere, software tools developer Stilo International plunged 37.5% to 1.3p after forecasting a material drop in revenues and a loss for its first half due to slower sales.
The AIM All-Share rose 0.16% to 960.2 during the week, while the FTSE 100 was 0.95% lower at 7,278.
Among the risers, project management group WYG rocketed 258% to 53.8p after agreeing a £43.4m takeover offer with US rival Tetra Tech. The purchase price of 55p per share means WYG’s shareholders will receive a 244% premium on the close price from last Friday.
Controversy over its product didn’t stop Equatorial Palm Oil rising 5.4% to 1.1p in the week after it agreed a US$ 20mln loan agreement with multinational Malaysian plantation group Kuala Lumpur Kepong.
Meanwhile, a pair of new contracts from the US sent shares in people screening tech firm Thruvision surging 6.5% to 29.5p.
Uranium miner Aura Energy shares were giving off a warm glow as they climbed 30% to 0.65p on the back of a milestone at its Tiris uranium project in Mauritania.
Oiler Volga Gas was also on the up, rising 2.5% to 82p, after it estimated that its underlying earnings for the first four months of 2019 would be ahead of the prior year.