by DOUGLAS SHEPHERD
The hundreds of shareholders with a stake in the Avocet group of businesses have been asked to waive their right to a 'notice period' as management seeks a quick change to the company's structure as part of a promised multi-million pound injection of capital by new investors.
But soon after the call for a short cut was issued at the weekend by Avocet Natural Capital (ANC) company secretary Eirlys Lloyd, a plea was posted on a shareholders' forum urging existing stakeholders to block the move.
The identity of the mystery investors has been kept a closely guarded secret by Avocet Natural Capital's directors although according to company chairman Martin Frost meetings with their suitors were being held this month off Cyprus and in Canada.
To allow the 'mysterious' deal to be sealed there would need to be alterations to Avocet's Articles of Association which govern how the company is operated and managed. The issue concerns the so-called Drag Along Rights (DAR) which would allow incoming investors to acquire shares currently held by small investors.
In her letter which was circulated on Saturday, Mrs Lloyd wrote: "I am asking you to consider by Wednesday 30th September a shareholder’s motion which I shall forward to you at short notice on Monday 28th September 2020. Preferably by Friday 25th September 2020, your written or emailed consent to the short notice period is sought though an identifiable recorded verbal consent (either in person or phone) shall suffice.
"Thus, I am writing
to you, to advise you as to a small change in the Articles of Avocet Natural
Capital Plc concerning ‘the drag-along right’. This change requires the consent
of 75% of all voting shareholders, a consent which ANC Plc directors have
already achieved. This small change is in accordance to UK Stock Exchange
rules."
The communication from Mrs Lloyd, which carried a warning that its contents should not be forwarded to third parties, explained that DAR was a legal concept in corporate law.
"Under the concept, if the majority shareholder(s) of Avocet Natural Capital Plc sells their stake, the prospective owner(s) have the right to force the remaining minority shareholders to join the deal. However, the owner must offer the same terms and conditions to the minority shareholders as to the majority shareholder(s)."
She went on to say that the potential buyer of 20% of ANC Plc shares at £3 wished to secure an option to acquire further ANC Plc shares till December 31st, 2023 at no more than £25 per ordinary share.
"That said, the buyers have indicated
that they wish ANC Plc to continue as an independent company but one which they
control: the problem lies with the UK Stock Exchange Rules which means that
once the buyers acquire over a certain share percentage they can be forced to
offer for the whole company – then the secondary problem of what happens if all
the remaining small shareholders do not want to sell. To circumvent this latter
problem (which can be very costly and acrimonious to sort) is the need to
change the Articles.
"Though UK
company law states that 75% of all voting shareholders require to consent to
such an article change (ANC Plc has already secured 75% of all shareholders) a
possible inconsistency is your short notice right which requires an absolute consent
of 95% of all ANC Plc shareholders to waive their ‘up to a 28 day notice period’.
This waiver is what I am asking you to give."
So now each Avocet shareholder is being asked to consider by Wednesday 30th September a DAR motion which will be forward to them at short notice on Monday 28th September.
However, Not Just Sheep & Rugby's attention was drawn to a strongly worded post on the Avocet shareholders' website which provides a platform on which investors who, between them, have reportedly sunk up to £50 million in the venture without any return so far, can express their views.
According to this edited version of the anonymous post under the pseudonym 'Interested Party 202020: "Do not give Martin permission to amend the Articles. He's given no details other than it will enable us (apparently) sell our shares for a x3-x25 profit. Not a chance. No further details, nothing. Think about it, who would purchase these shares? We cannot let him continue like this".
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