MMG attempts to oust DNZ board members

MMG Advisory Partners director David van Schaardenburg is seeking support to remove three DNZ directors and appoint MMG members to keep a closer eye on shareholders' interests.

MMG Advisory Partners (the former Money Managers) has written to its many clients who are DNZ investors asking they vote to have three of DNZ’s existing board members removed, with Mr van Schaardenburg and MMG chief executive Derek Young appointed in their place to better care for their interests as shareholders.

The three directors Mr van Schaardenburg has said he would like to see removed are Simon Botherway, who was appointed to the Securities Commission in September, and the two directors which MMG clients voted to have appointed in the first place John Harvey and Mark Hopkinson.

If 75% of MMG’s clients who have existing DNZ investments vote for the move, it will be forced to take effect. Because they voted to appoint Mr Harvey and Mr Hopkinson, they can vote to remove them.

When DNZ lists on the NZX December 17, the shares MMG clients own will be consolidated. Each five shares will be reduced down to only two, slashing the value of their investment.

DNZ’s initial public offering is a capital raising underwritten by Goldman Sachs JBWere of $130 million ($30 million of which will be earmarked for existing investors), but $43 million of this will go to the company’s chief executive and its soon to be retired director Alastair Hassell, who is stepping down in March.

The two will each pocket $10.75 million in cash, with the balance being invested back in to the company to reduce debt under an eighteen month moratorium.

Despite widespread investor opposition, DNZ does have the right to launch the capital raising as it is without approval of its shareholders.

One retired DNZ investor who is a client of MMG told NBR that he invested $80,000 ten years ago and now relied on the returns for income.

But when the capital raising is completed and DNZ is listed, the investor who wishes to remain anonymous will see his investment shrink in worth.

“My dividend will drop from $4800 annually to around $2300, a return of under 2.9% on my original investment. To maintain my proportional holding in DNZ I would need to commit a further $30,000 to buying new shares - money I do not have,” the investor said. “Consequently I am faced with a capital loss of almost $50,000.”

MMG clients need to have their votes in regarding the replacement of board members by next Wednesday, 9 December.