Six directors of listed investment company Van Eyk Three Pillars (VTP) have resigned, signalling the end of a two-year saga that saw them replace VTP's previous board and return 95 per cent of the company's capital to shareholders.
About two years ago, shareholders elected to oust the previous board as a result of the company's poor performance, and replace it with new directors, including four executives from Dixon Advisory.
The main measure of the underperformance was VTP's share price relative to the company's net tangible asset (NTA) value.
Dixon Advisory managing director of strategy Chris Brown said VTP shares had persistently traded at a discount to NTA.
"Since inception, the fund had underperformed on a share-price basis by more than 50 per cent to 2009 when we undertook to get elected to the board," Brown told InvestorDaily.
Dissatisfaction with VTP's performance came to the attention of the Dixon Advisory directors as a result of conversations with clients, Brown said.
In 2009, shareholders elected to replace VTP managing director and current van Eyk Research chief executive Mark Thomas, VTP director Cameron McCullagh and independent directors David Iliffe and Andrew Grant.
Shareholders elected four Dixon executives - Brown, Alan Dixon, Alex MacLachlan and Chris Duffield - as new directors. Stuart Nisbett subsequently joined as VTP's independent chairman and John Vatovec as independent director.
However, Brown said the six directors had resigned because they had done what they set out to do, to make changes at VTP which had allowed investors the opportunity to get their money back at a price equivalent to NTA.
He said the major part of the review had been a return of about 95 per cent of the company's capital to shareholders. The capital return occurred in late 2010.
"The company is much smaller and shareholders have been given an opportunity to effectively get all their capital out at net tangible asset [value] in the most recent off-market buyback," he said.
"With that sort of election for shareholders, that has pushed the company into a position where a substantial shareholder that owned 19 per cent pre the buyback now effectively controls Van Eyk Three Pillars with an ownership level of more than 50 per cent."
Two Tidewater directors, Andrew Brown and Steve Roberts, have been elected to the board. Independent consultant Richard Ochojski has also been named a director.
Brown said investors had shown they would not sit quietly if they believed companies were being poorly managed.
"This process - the strategic review and the implementation of capital returns - is a signal that board of directors of investment companies need to be mindful of their current shareholders and the impact that significant discounts to NTA can have on the current shareholder base," he said.
