Bruce Sheppard wants Geneva directors dumped

Bruce Sheppard wants Geneva directors dumped
The New Zealand Shareholders Association (NZSA) has written to shareholders of Geneva Finance proposing that they remove the existing directors of the troubled finance company and replace them with three new directors, including NZSA chairman Bruce Sheppard. Geneva Finance has been conducting a moratorium since October 2007, having frozen 3,000 deposits worth NZ$138 million, according to our definitive Deep Freeze list. The letter outlines the weakened position shareholders found themselves in after the recent recapitalisation and reconstruction of the company. "(Y)ou were effectively given no viable option but to become a reluctant shareholder in the company rather than remaining as a debenture or subordinated note holder. As a by-product of this unsavoury situation you also had to accept a reduced security ranking as a shareholder from the security position you previously had," the letter said. It also said the current directors were linked by common business interests and other directorships, proposing that they be replaced by three independent directors: Tony Boswell, June McCabe and Bruce Sheppard. Here is the full letter to investors below

Dear ,

As a result of the recent recapitalization and restructure of Geneva Finance Limited you were effectively given no viable option but to become a reluctant shareholder in the company rather than remaining as a debenture or subordinated note holder. As a by-product of this unsavoury situation you also had to accept a reduced security ranking as a shareholder from the security position you previously had.

Although you as a group have a significant majority shareholding in the company, as individuals you are minority or small shareholders. The NZ Shareholders Association was formed to protect the interests of small shareholders and it is for this reason that we write to you. As the owners of the company you do have significant rights as a group especially when it comes to the appointment of directors to the board to manage your company on your behalf.

We note with some concern that the current board of directors is largely unchanged from that which held office prior to the recent recapitalization and ownership change when the company was a private company. These encumbent directors presided over the events of the past year and they are still in control. The two recent appointees are also business associates of the existing directors.

Given the events of the past twelve months, the significant change in shareholding in favour of debenture and subordinated note holders, the company's recent poor performance and the importance of ensuring an independent board to protect the interests of all shareholders, we don't think that is appropriate. In view of the state of the New Zealand debenture market and in the current economic climate we are also in support of your investment being fully repaid as a matter of priority and as soon as possible.

It is of fundamental importance to have absolute confidence that the board acts always in the best interests of the company and all its shareholders, that the independence of the board and its directors is guaranteed and that current management is separate from the board. It is a matter of public record that the entire current board of directors are linked in some way with common business interests and other directorships.

It is for these reasons together with the need to achieve governance balance given the level of common business interests and association of existing directors, that the NZ Shareholder's Association proposes the following :

"¢To remove Mr Brian Walsh, Mr Peter Francis and Mr David O'Connell as existing directors of the company ; and "¢To appoint Mr Tony Boswell, Ms June McCabe and Mr Bruce Sheppard as new directors of the company.

This is a matter of fundamental importance to protect your investment in the company and we request your support to call an SGM to consider the above proposal.

We assure you that the three directors that we suggest you appoint are all independent.

To achieve this we need to secure the support of 5% of the share register to call a Special General Meeting and place the following motion to shareholders to vote on;

"¢To remove Mr Brian Walsh, Mr Peter Francis and Mr David O'Connell as existing directors of the company ; and "¢To appoint Mr Tony Boswell, Ms June McCabe and Mr Bruce Sheppard as new directors of the company.

Attached to this letter is the appropriate form to call the meeting and we request that you sign and return it to us.

Yours faithfully

New Zealand Shareholders' Association Incorporated

C H Curlett

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.