Vertex Chairman Promises Shareholder Meeting
March 16, 2005
Vertex Chairman Promises Special Shareholder Meeting If Necessary To Resolve Board Conflict Issues
Tony Frankham, recently appointed independent chairman of Vertex Group Holdings Ltd, has promised shareholders an extraordinary meeting of shareholders will be called to resolve the composition of the company's board, if the current conditional bid for 90% the company by Masthead Equities Ltd does not succeed.
Mr Frankham said the company's court action, commenced to challenge the validity of the appointment to the Vertex Board of directors associated with Masthead and potential conflicts of interest, would now be discontinued, since the issues before the court would now be resolved either by the promised extraordinary general meeting or by the conditional Masthead bid succeeding.
In a letter to shareholders mailed today, Mr Frankham said shareholders should treat with caution statements being made in the media about the board's alleged unwillingness to enable Masthead-appointed directors to contribute to the success of Vertex, and withholding of information to those directors.
"The board established the current protocols whereby Masthead do not receive information on those parts of Vertex's business which are competitive with Alto Plastics, in which Masthead is the major shareholder. This was seen as a temporary measure to deal with the potential for Masthead directors to be in a conflicted position, until a more durable solution to the problem could be arrived at," said Mr Frankham.
"I am now confident that a long term solution will be found in the next few months. I believe the legal action brought by the company challenging the validity of Masthead's appointments to your company's board has been valuable. It has directly or indirectly resulted in the re-establishment of improved communication at board level through the appointment of an independent chairman, and it has been a factor in Masthead issuing its takeover offer - thereby increasing the possible range of solutions to the problem of the current unsatisfactory board structure that cannot be permitted to continue long term.
"The view your independent directors have now taken is that, with the presence of an independent chairman, and the bid having been launched, the proper forum to determine board composition (should the Masthead bid fail) is through a shareholders meeting convened expressly for that purpose. If Masthead's bid is unsuccessful (i.e. it fails to be declared unconditional), and/or an appropriate agreement on board composition is not reached with Masthead, then your independent directors will proceed with a special meeting of shareholders to determine board composition, and resolve this situation to the satisfaction of a majority of shareholders.
The litigation has therefore served its purpose and it is in the company's interest that it be now discontinued. Your independent directors are in discussions with Masthead on this and expect to be in a position to proceed along these lines either with our without the agreement of Masthead."
Mr Frankham also told shareholders they should treat with caution various negative statements from the bidding company about the current and ongoing value of Vertex shares and the company's performance and prospects.
"You will be aware that the company achieved its most recent budgets and, as I advised you recently, is on track to achieve a similar trading performance in the year to March 31, 2005."
Mr Frankham repeated his earlier advice that shareholders should do nothing when they receive the Masthead offer, but wait for a valuation commissioned by the independent directors from Grant Samual & Associates. This will be sent to shareholders as part of an overall target company statement containing the advice of the independent directors.