Washington H Soul Pattinson and Company (WHSP) has endured a fiery annual general meeting at which it fended off a key institutional investor’s push to have a board member elected.
Fund manager Perpetual’s nominee to the board of the investment company failed to get elected, but not after claiming a significant protest vote.
Perpetual, which holds a 12.4 per cent stake in WHSP, had sought the appointment of an independent director to the board.
It cited the potential conflict of interests related to possible bids for one of WHSP’s biggest investments, New Hope Coal, in which WHSP holds an almost 60 per cent stake.
New Hope Coal’s chairman is Robert Millner also chairman of WHSP, and the coal miner’s board includes two other WHSP board members.
Perpetual’s nominee, corporate adviser Robert Fraser, managed 17.6 per cent of votes cast at Friday’s AGM in Sydney.
While the bid was easily defeated, Mr Fraser said the proxy votes showed a significant number of WHSP shareholders not aligned to Mr Millner or other companies he chaired or controlled, had supported his appointment as an independent director.
“We actually probably command close to a majority of the non-Millner aligned independents,” Mr Fraser told the meeting. “There’s half a billion dollars worth of shares for people who do feel disenfranchised – two-thirds of the vote other than the vote that you control.
“Think about that.”
His bid was doomed to fail after WHSP’s major shareholder Brickworks said last week it would not support the nomination.
In a cross-shareholding arrangement in place since 1969, Brickworks holds 43 per cent of WHSP, while WHSP owned 44 per cent of Brickworks. Both companies are chaired by Robert Millner.
The WHSP board also includes his son Tom Millner, cousin Michael Millner, brother-in-law David Wills and Peter Robinson, who is married to the chairman’s cousin.
Mr Millner played down Mr Fraser’s voting result after the AGM.
“You can all put a spin on numbers,” Mr Millner said. “Outside of Perpetual he got four and a half per cent of people that voted,” Mr Millner said, referring to the tally of proxy votes cast prior to the meeting.
Perpetual has a 12 per cent stake in Brickworks and a seven per cent stake in New Hope.
Mr Millner earlier told the AGM that the company remained in a strong financial position with cash reserves of more than $338 million.
He said the company expected first half earnings to rise from a year earlier as the investment firm scouted the world for takeover opportunities.
“While we have been scouting the world for acquisition opportunities and remain vigilant in this area, we are also constantly looking at ways to distribute value to shareholders,” he said.
Perpetual head of equities Matt Williams told the meeting he believed a dismantling of the cross-shareholder arrangements between WHSP and Brickworks would result in an “uplift of around $1.5 billion to shareholders”.
In terms of the potential New Hope transaction, WHSP chairman Mr Millner said process had moved to the second stage and was expected to take several months.
Washington H has large holdings in several companies on the Australian stock exchange, including Australian Pharmaceutical Industries, BKI Investment Company, Brickworks, New Hope Corporation, Ruralco Holdings, Souls Private Equity and TPG Telecom.
WHSP closed up five cents at $13.80.
