Wingate builds pressure on Everest
Wingate Group has sent a letter to the shareholders of Everest Financial Group, urging them to support Wingate’s proposal to overthrow the current board.
Wingate is Everest’s largest shareholder, and has been fighting since March to have the current Everest board overthrown and replaced by a mix of independent and Wingate directors.
In the letter, Wingate claimed Everest’s business strategy was inconsistent with market realities — with costly unsuccessful initiatives being launched. Everest’s new products, including a credit opportunities fund launched last year, were illiquid, opaque and expensive — which was inconsistent with key requirements for investors after the financial crisis, the letter said.
Four separate litigation issues in the last 18 months have already been identified to shareholders and have caused a loss of funds and revenue. One of Everest’s subsidiaries, Everest Capital, and the chief executive, are facing litigation in relation to LIK Nominees investments in the Everest Babcock and Brown fund, according to the letter.
According to the Wingate letter, Everest’s share price has continued to fall by 29 per cent since March 2009, despite the share market recovering 53 per cent during the same period.
Everest’s earnings before interest and tax has fallen by more than $2.3 million in six months, with an operating loss likely for 2010, the letter said.
The market has lost confidence in the future performance of the current board and management, the letter said.
The business seems to have little future beyond providing a few years’ income for employees and no benefit to shareholders, the letter said.
“We are not satisfied with the performance of the current board and management, and you shouldn’t be either. Put an end to the value destruction by voting out the current board,” the letter said.
Wingate managing director Farrel Meltzer said the fund might need to be wound down if Wingate could not turn around the business. Dramatic changes were needed to stop the erosion of shareholder wealth, address costs, and develop a new strategy for the business, he said.
The vote will be held at Everest’s annual general meeting on May 24.
AUTHOR
Benjamin Levy
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