In a letter to its shareholders, the Board of directors of the AIM listed real estate firm Hirco Plc has urged it shareholders to vote to against the proposals made by Laxey Partnes, an activist investors and a 10.1% stake holder in the firm. The board has also announced an extra ordinary general meeting (EGM) on 6th May, 2009.
The letter clearly states the intentions of the directors to resign from the board if any of the resolutions are passed at the EGM. “Were any of the Resolutions passed at the EGM, it is the current intention of all the remaining directors to resign from the Board”, says the letter.
The EGM has been announced in response to an EGM demanded by the Laxey Partners on 20th February.
Laxey Partners has proposed the removal of Niranjan Hiranandani, David Burton and Nigel McGowan as Directors of the Company and has also demanded the appointment of a new chairman who should be independent of the Hiranandani family. It has also proposed to appoint Andrew Pegge, Michael Haxby, John Bourbon and Aled Rhys-Jones as directors of the company.
Laxey Partners’ agitation came after the Hirco board announced its plans to merge its real estate projects (township developments at Panvel near Mumbai and Chennai) and Hirco Developments, a development firm, with its investment arm Hirco. Laxey Partners had strongly opposed the merger stating that it would dilute their interest and in turn effectively cede control to the Hiranandani family.
According to the Hirco Board, the proposals made by Laxey “run directly against the interests of the company”. The board also says that Laxey’s proposals are damaging to the company and not in the best interest of the shareholders. The board also feels that Laxey has misunderstood the checks and balances in Hirco’s structured board arrangements.
The board has stated its plans to move to the Official List of the London Stock Exchange in due course. It has also said that it will undertake a programme to seek a further experienced director who would act as an independent Senior Non-Executive Director.