Yesterday after the market close, on behalf of shareholders representing not less than 5% of the outstanding capital of Bidstack, I submitted an EGM requisition proposing the following resolutions:
1. “THAT Glen Calvert be removed from office as a director of the Company with immediate effect.”
2. “THAT Lisa Hau be removed from office as a director of the Company with immediate effect.”
3. “THAT Nicholas Hargrave be appointed as a director of the Company with immediate effect.”
This group of shareholders would also have submitted a resolution to remove Donald Stewart had he not already been up for a re-appointment vote at the upcoming AGM on 21st July 2023. We encourage shareholders to vote against the re-appointment of Donald Stewart and we are rapidly losing faith in David Reeves as chairman whose re-appointment is also due at the upcoming AGM.
Evidence of the board’s failings comes from simply looking at the company’s share price. While we believe that the company has a strong operational management and huge potential for profitable growth, significant shareholder value has been, and continues to be, destroyed by the actions and inactions of the non-executive directors. These have been well documented but to summarise just a small number:
- Lack of focus on cash management, most recently highlighted by the new CFO able to reduce monthly cash burn costs by 40% within months of arriving.
- Equity fund raisings at increasingly dilutive share prices, necessitated by the lack of cash management despite potentially more attractive funding alternatives that they apparently failed to explore.
- Issued nil-cost options without performance targets, greatly offsetting dilution for insiders at the cost to shareholders.
- Continue a policy of almost non-existent investor communications with no disclosure of KPIs leaving investors with no information upon which to effectively evaluate progress.
- Seemingly allowed the sale of shares by key management when market expectations were not met shortly thereafter.
- Appeared to selectively disclose material information only to certain shareholders.
- Breached company law as they proved unable to call an AGM within the legally required period.
- Lost the key commercial partner and remain embroiled in an ongoing legal dispute.
With a market cap now of just £12m we believe that an 8 strong board is completely unjustifiable and question why a company of this size needs a CSO. We, therefore, call on shareholders to support our action to remove / not re-appoint Donald Stewart, Glen Calvert and Lisa Hau.
The EGM requisitioners also support my appointment to the board based on the following experience:
- Extensive M&A, capital markets and corporate finance experience from 11 years of investment banking at Rothschild and UBS.
- 8 years of private equity experience including fund-raising, arranging debt financings, ensuring strict cash management controls and processes, achieving efficiencies, and implementing growth strategies.
- 3 years on the board of Unlimited Group, an integrated digital marketing agency, providing highly relevant board and industry expertise alongside extensive industry contacts.
Their support for my appointment is also based on the following actions I propose to take should I be appointed to the board:
- Forensically scrutinise the budget, cash flow forecast and cash management process. Costs have clearly been out of control and the company has never hit any public performance target, even ever-changing market expectations. The cash runway must be extended as far as possible to avoid any unnecessary dilution.
- Actively engage in the negotiation of the proposed CLN to ensure the best possible terms to minimise further dilution or ensure a better alternative is found.
- Stop the use of market expectations for guidance. A market presentation by the management is urgently required with proper guidance and a detailed explanation of the business model, commercial agreements and key value drivers to allow investors to properly evaluate the company. This would be the start of greatly improved investor communications with much more timely updates and greater frequency of positive news.
- Based on my own research and conversations I believe that there is a solution to the Azerion legal dispute and a way forward to re-igniting the commercial relationship. I believe that a change of personalities at the board level is crucial for achieving these goals.
- Insist on board fees in the form of share-based payments rather than cash until the business is cash generative. I believe it is hugely important to show shareholder alignment on the board and highlight my belief in the chronic undervaluation of the company. I would request these non-cash payments to be based on a 2.85p share price i.e. the last placing price and a significant premium to the current share price. I also have a personal shareholding greater than any board member other than James Draper.
- Review all outstanding options of management and the strategic advisors. It is unclear to shareholders what value the strategic advisors have delivered and how they are being incentivised, but I believe that a review is necessary and public disclosure required for agreements that remain. I also believe that nil cost options with undisclosed performance targets (if there are even targets) are awful. It is crucial that key management are very well incentivised, but I don’t think the current structure is at all optimal for them or shareholders and can be significantly improved.
- Review the NOMAD and broker relationships to ensure the company and board is receiving the best advice and investor access.
- Drive a culture of honesty, proactive investor engagement and a core focus of per share intrinsic value.
Bidstack’s shareholders deserve better non-executive directors that are relentless in pursuing per share value creation alongside good governance. The upcoming AGM and to be announced EGM provide the opportunities to make the changes that are so very desperately needed.
