Abano Healthcare [NZX: ABA] directors have terminated the employment of former director and disaffected shareholder Peter Hutson and his wife Anya from joint venture Bay International, citing conflicts of interests.
The move follows an Employment Relations Authority decision Friday ruling in favour of the Abano directors on the board of Bay, an audiology business.
Mr and Mrs Hutson hold 50% of the shares in Bay, while Abano holds the other 50%.
Late last year, Mr Hutson, who owns about 15% of Abano, backed a takeover bid for the listed company by private equity firm Archer Capital.
One aspect of the indicative proposal involved Mr Hutson acquiring Abano’s half share of Bay for a “nominal sum.”
Abano rejected the takeover proposal and then made a formal offer to Mr Hutson to buy his stake in Bay International for $12.9 million – a discount to what Abano believed the business was worth but a premium to what Mr Hutson thought.
Last month Mr Hutson, and fellow Abano shareholder James Reeves, commissioned Kordamentha to critique a valuation report by Grant Samuel of the Bay International business.
Kordamentha valued the 50% Bay stake at $7.8 million versus the Abano board-commissioned report by Grant Samuel of $18.2 million.
Abano executives on the Bay board include Abano managing director and Bay chairman Alan Clarke and chief financial officer Richard Keys.
In a statement this morning, Abano says the ERA noted the Hutsons’ conflicts of interests arising from the takeover bid in which they were involved last year.
Messrs Clarke and Keys had suggested that “protocols be put in place to manage the conflicts” but this was rejected by the Hutsons.
In ruling in favour of the Abano-appointed directors, the authority noted that to not have the right claimed by Abano “flouts business common sense and would produce a commercially absurd outcome.”
Abano says the termination does not affect the Hutsons’ shareholding or their rights to board representation on Bay.
“Both shareholding groups are, to that extent, now on an equal footing.”
Mr Clarke says Bay’s financial performance is improving after a disappointing start to the audiology venture and following the appointment of a new executive team.
“The new executive team in Australia has made a material difference and we are seeing a significant improvement, with solid sales growth over the past two years. This has provided us with confidence that the business is now on track to achieve break even at EBITDA, and to then provide a positive profit contribution to the Abano Group.”
Meanwhile, Mr Hutson and Mr Reeves are still waiting for Abano to name a date for a special shareholders meeting they have requisitioned to vote on removing Abano's chairman, Trevor Janes.