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Small INM shareholders critical of O’Brien
08 November 2009 By Samantha McCaughren, Business Correspondent
Small shareholders at Independent News & Media ( INM) have had a tough time of it lately, watching a board split played out in the media as the share price tanks to record lows.
The extraordinary general meeting which took place in the Green Isle Hotel in Dublin last week saw a weary and emotional crowd turn up to vote against the proposals put forward by dissident shareholder Denis O’Brien.
They will have another egm on Friday and a further such meeting to consider the sale of the company’s South African business before the month is out.
As always, most of the votes were cast ahead of the meeting, but those who showed up were keen to get answers. Many of the small shareholders are former INM employees and have a long-standing loyalty to the group.
While the egm was not the explosive face-off between chief executive Gavin O’Reilly and O’Brien which might have been expected some weeks ago, there were some passionate declarations from a few shareholders. Most were critical of O’Brien, although there were some jibes thrown at INM management also.
While O’Brien did not show up, his nominated directors Lucy Gaffney and Paul Connolly were present, sitting in the middle of the few dozen people attending. The pair sat some distance away from Baroness Margaret Jay, with whom Gaffney had clashed in the boardroom. This row formed part of the backdrop which led to O’Brien’s call for an egm.
There were two resolutions put forward on Tuesday, one to remove Brian Hillery as chairman and a second to replace Baroness Jay as independent director.
The first comments from the floor were from shareholder Oliver Daly, who told director and chair of the meeting Kenneth Clarke: ‘‘I for one will be voting for Dr Hillery and Baroness Jay. I think otherwise it would be like turkeys voting for an early Christmas."
In a reference to a previous comment by O’Brien about bondholders in INM ‘smoking dope’ if they thought he would write a cheque to cover the group’s debts, Daly said: ‘‘I don’t know what Mr O’Brien is smoking. Certainly not John Players No 1. It’s just ridiculous from our point of view."
‘‘I think the other directors representing Mr O’Brien don’t represent us. I think they are partisan directors and I wonder if it’s best that they should continue on the board," said Daly.
Another shareholder, who said he was a corporate governance consultant, was not fully supportive of INM management but had concerns about O’Brien’s strategy also.
‘‘When Mr O’Brien agreed to talk to Mr O’Reilly, I for one was delighted. I thought this company needed some decent corporate governance - it hasn’t had it."
But he said: ‘‘I think what Mr O’Brien is doing is opportunistic.
I don’t think it’s correct." However, he said that O’Brien had raised some valid points in the proposed resolutions that the company had decided against putting to shareholders.
He was the first to turn the heat on Gaffney and Connolly.
‘‘I would like to hear from some of the O’Brien-appointed directors as to what their vision is for the future, because obviously these resolutions of theirs are going to be defeated today."
Another shareholder, Joe O’Keeffe, asked Clarke if any of O’Brien’s people were there to answer the investors’ questions.
‘‘Two are," replied an eagle eyed Clarke.
‘‘I’d like to ask the question to the two people concerned. I sat with disgust watching Mr O’Brien’s interview outside Farmleigh, and he was advising people not to invest in INM and saying it [the share price] was going to go lower," said O’Keeffe. ‘‘Is that their view?"
‘‘I want them to know those three representatives are not just representing Mr O’Brien on this board, they are representing all shareholders, and if they do hold that view I have difficulty in understanding how they see this company going forward,’ ‘ added O’Keeffe.
Clarke started off by saying that he did not want the egm to turn into a general debate but eventually said that it was up to Gaffney and Connolly to respond.
‘‘The two representatives heard your questions and can see where you are sitting, so I think it is perfectly possible if they wish for one or other of them to approach you once the meeting is ended and discuss and respond to your questions," said Clarke.
In the end the two directors resisted the pressure to comment, despite the palpable tension in the room. They declined to speak to the media after the resolutions were rejected.
While the egm was a damp squib in many ways, it pointed to the upset felt by small shareholders who have been powerless in this struggle. O’Brien has insisted that he wants to see this company achieve its full potential, but ordinary investors are not convinced at present.
Friday’s resolution on restricting the company’s ability to issue shares is also expected to be defeated. However, sources on both sides of this row do not believe for a moment that O’Brien has accepted defeat, and he is still working on an alternative plan to wrestle control of the newspaper group.
This week the bondholders vote on the debt restructuring plan agreed with INM management and it would appear that it will become increasingly difficult to derail this arrangement.
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