QIN 0.00% 29.5¢ quintis ltd

Frank Wilson leads shareholder revolt at first AGM since...

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    Frank Wilson leads shareholder revolt at first AGM since short-seller's attack
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    Frank Wilson was an active shareholder at Quintis' annual meeting on Friday. Philip Gostelow
    by Vesna Poljak
    Quintis founder Frank Wilson dominated the company's hostile annual meeting on Friday, which heard an accusation that the board declined to engage with a potential partner because it had links to the former boss of the company previously known as TFS.

    That claim was made by Mr Wilson's son, Ben, who asked chairman Dalton Gooding whether the company had given the "cold shoulder" to an unnamed interested party because they sought a clean break from Mr Wilson.

    The board refuted the accusation, which appeared to originate from comments made by an investment banker working on the deal.

    It is the first time the board of Quintis has faced shareholders since a contested report from US short-seller Glaucus in March estimated Quintis shares were worthless, and invited further scrutiny of its business model.


    "I want to acknowledge the frustration and disappointment that shareholders likely feel as a result of the situation we are now in," Mr Gooding said. Quintis has been aiming for a recapitalisation for the past six months.


    Chief executive Julius Matthys said that discussions with multiple parties "are continuing".

    "They're not continuing as quickly as I would like, but they are continuing," he said.

    Escalating troubles
    In responding to Glaucus, Quintis admitted that it had not sold any timber into China in 2017, and has not done since. The share price reaction prompted founder Mr Wilson to resign and pursue a privatisation bid, which was unsuccessful. But it wasn't until May that the company's troubles escalated and its shares have not traded since.


    That is when it emerged that Quintis had lost sandalwood oil buyer Galderma as a customer in 2016, despite telling the market this year it had a 20-year contract to supply the group. It now faces two shareholder class actions in the Federal Court which it is defending. The second of these identifies Mr Wilson as a defendant; he too is defending that action.

    Quintis missed its interest payment to bondholders on August 1.

    Mr Wilson, who is the largest shareholder of Quintis and faced his own battle with his margin lender, appeared to capitalise on the tension between other investors and the board at the meeting in Perth.

    At one point he turned to the crowd and asked other shareholders whether they wanted answers. Mr Gooding and Mr Matthys responded to most questions by saying they were bound by confidentiality agreements and risked jeopardising the recapitalisation effort.


    A vote of "no confidence" was floated but could not be mounted.

    If the effort to save the company is unsuccessful, Mr Wilson's equity will be among those wiped out. "It is critical for the company's survival that the recapitalisation comes to fruition," Mr Gooding reiterated.

    Mr Wilson's wife also asked a question from the floor regarding senior staff's faith in leadership. Dissatisfied with the response, Mr Wilson prodded further.

    The results of the meeting show both resolutions were passed by way of a poll and votes cast against the remuneration report fell just short of 25 per cent.


    Put option extended
    Meanwhile, a potentially explosive put option held by hedge fund and plantation investor Davidson Kempner worth more than $30 million has been extended again.

    The company said on Friday that an agreement was reached to move the option exercise window to January 15 to 19, having previously been exercisable this week. Quintis would have to pay out on February 2 if the put is struck. The value attached to that option is estimated at $US31.5 million ($41 million).

    The hedge fund stands to win under a change of control event, which inflates the put value to $US34 million and can be struck any time before December 2018.


    High net worth investors separately hold $19.6 million of puts exercisable in September 2018, payable in late 2018 and 2019.

    Quintis wrote-down the value of its plantations by $300 million last month, which has consequences for the interests of plantation investors. Underpinning the writedown is a lower estimated heartwood yield, referring to the prized part of the sandalwood tree; lower projected oil content; and a higher discount rate input.

    Glaucus argued subsequently that the company had not gone far enough because it left its sandalwood oil price assumption intact.

    On Thursday, a dispute with growers escalated when they sought an extraordinary general meeting to install an alternative responsible entity.
 
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