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Abano dissidents admit defeat in board stoush, vow to fight on

Dissident shareholders seeking removal of Abano Healthcare [NZX: ABA] chairman Trevor Janes admitted likely defeat at the special meeting to vote on the issue in Auckland today, amid accusations of predatory behaviour from other shareholders.

The meeting took 90 minutes to get to the vote on the single item on the agenda: a motion from former Abano director Peter Hutson and fellow shareholder James Reeves to remove Janes.

Abano forced Hutson's resignation in the course of a failed takeover bid last year by Archer Capital, and had feared retail shareholders might side with Hutson and Reeves, who control close to 19 percent of the company.

More than 82.5 percent of Abano's shares were voted by proxy before the meeting, and 76.6 percent were against the resolution of Hutson and Reeves to remove Janes as a director. Excluding shareholdings associated with the pair, the resolution garnered just 0.79% support, the company said.

"It appears from the votes cast today that we are not going to have justice, certainly not this week," said Reeves in his address to shareholders outlining why Hutson and he believe Abano is failing to execute its strategy to grow a dental business of scale in Australia.

"What you can rely on is that we will remain as shareholders, will continue to be vigilant and to monitor the performance of the company and will be holding the board to account in respect of their governance practices."

The chairman of the New Zealand Shareholders Association, John Hawkins, holding proxies for 5 percent of the Abano register, called on Hutson and Reeves to "engage constructively with the company as the company has repeatedly requested them to or they should sell their shares."

"Continuing disruption will only result in loss to all shareholders", who had found Hutson's and Reeves's arguments "totally underwhelming," said Hawkins to applause from the 90 or so shareholders who attended the meeting in person.

Another shareholder described Hutson and Reeves as "two predators of the worst kind" who were seeking to cheat shareholders out of value. "Shame on you," he said to the pair, who sat stoney-faced in the front of the meeting.

Hutson faced questioning on the structure of the Archer bid, which would have seen him and Reeves acquiring Abano's 50 percent share in a jointly owned audiology business for "a nominal sum", and declined to say what that sum would have been had the bid succeeded.

Doyens of the institutional investor community also weighed in on the Abano board's side.

Milford Asset Management principal Brian Gaynor said he found Hutson's criticisms of Abano's Australian growth strategy "strange" when they mirrored the strategies pursued when Hutson was growing the business in New Zealand.

Fisher Funds chief investment officer Mark Brighouse, accompanied by the firm's principal, Carmel Fisher, was scathing of Hutson's and Reeves's attempts to dress up their response to an unsuccessful takeover bid as shareholder activism.

While the meeting had been a "delightful" opportunity for the company and its shareholders to catch up, "I think it's time we all got back to work," he said, also to applause.

The shares last traded unchanged at $6.90.


Comments and questions

Is Mr Reeves being a tad arrogant when he says ‘we are not going to have justice”? Perhaps now is the time for he and his ilk to step back and see who voted against his proposal, it looks like the majority of shareholders will get justice!

Shareholders have been right royally misled yet again. The Special Meeting explanatory note states in big letters and graphics (page 3) that Abano FY14 NPAT growth was due to dental. That is a completely false statement.

Dental performance went BACKWARDS in FY14. The improvement was solely due to Audiology. Do the maths, it ain't difficult.

NZ's Capital Markets have a choice to make here. Step back into the past or embrace 21st century standards of corporate governance. Otherwise this fiasco will continue.

You have to give credit to the creativity of the Grant Samuel valuation and the coincidental timeliness of its presentation by Abano prior to the AGM. I've never read a so called 'independent' valuation that places value on dental practices that haven't yet been acquired. Do they do real estate valuations?

Where was Korda Mentha when you needed them?

Hutson and Reeves were beaten by the other shareholders. They should admit defeat and leave the company to get on with running its business. This is an unnecessary distraction and expense.

Don't forget where this all started. Hutson put forward a proposal and the Board would not even negotiate let alone consider putting it to a shareholder vote. So much for democracy. To the extent this company has ever delivered meaningful returns it can fairly squarely be traced back to Hutson's audiology business and its sale. And now the one performer who has the most invested is on the outer. One has gotta wonder.

Check page 15 of the Grant Samuel report, note BIL's improvement in FY14 ($3.3m). Then compare this with the Abano graph on page 3 of the explanatory documents sent to all shareholders on 21st May that states Abano Group FY14 NPAT improvement ($1.5m) is due to Dental.

Does anybody see the disconnect? The company's own $ numbers don't support its actual Special Meeting marketing material.

This needs to stop now. The shareholders have spoken. Let the company run on in peace or buy the Company using the conventional method.