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Hornby – regime change General Meeting requisition withdrawn

By Steve Moore | Tuesday 9 May 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Hornby (HRN) has updated that “further to its announcements dated 10 April 2017 and 25 April 2017… on 8 May 2017 it received a letter… withdrawing with immediate effect the requirement for the company to proceed with convening the requisitioned general meeting”

The 10th April announcement was of receipt of a letter from beneficial owners of c.20% of the paid-up share capital requisitioning a General Meeting to remove Chairman Roger Canham from office and to appoint Alexander Anton.

On 25th April the company published (along with notice of the requisitioned General Meeting for 16th May) a circular emphasising “the directors unanimously consider that the requisitioned resolutions… are not in the best interests of the company or its shareholders as a whole… for the following reasons: the strategy currently being pursued by the board is well thought-out and is working, the current structure and composition of the board is consistent with good corporate governance; and the board has the support of a majority of its shareholders”.

Hmmm. I previously stated that there looks some merit in the rebels’ argument, but the 25th April announcement also included “the board has received irrevocable undertakings to vote against each of the requisitioned resolutions from Phoenix Asset Management Partners Limited, Ruffer LLP (acting as agent on behalf of its clients) and Downing LLP in respect of, in aggregate, ordinary shares representing 45,637,248 ordinary shares and 53.96 per cent of the issued ordinary share capital”.

Phoenix is the largest shareholder here, with a 34.31% stake, and its Chairman is, er, a Mr Roger Canham! Surprise, surprise there then. However, with third largest shareholder Ruffer (13.19%) and fourth largest Downing (6.45%) also lined up against them, the requisitionists have now written to withdraw the Meeting requirement.

This sees the shares currently slightly lower, at below 32p, from when I updated in April that there was enough to see the shares remain on the watchlist, but that I’d want further financial evidence of turnaround progress before considering a recovery buy. Following these latest developments, that remains my view.


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