Gatemore Capital Management, a shareholder of DX, has called for two of the group’s board members to step down.
Gatemore, which is the largest shareholder with 11.3 per cent of DX’s common stock, has requested the group convene an EGM proposing that the chairman Bob Holt, and non-executive director Paul Murray are replaced by four independent board members.
According to Gatemore, share value of DX dropped by 90 per cent after profit warnings were issued in November 2015 and in February 2017. The company said that despite DX implementing an integration plan, performance had not improved.
It added that the current board members have not found any alternatives, and that there is “consensus amongst DX’s largest shareholders that board-level change is required.”
The Board of DX said that it is disappointed by the decision taken by Gatemore to request a general meeting of the company. It said: “The Company believes it has an open and constructive dialogue with its shareholders and, at this stage, outside of Gatemore’s proposal to replace DX’s two existing Non-executive Directors, the Board is unclear as to Gatemore’s intended objectives in requisitioning a meeting.
“As announced in early February, the Board has commenced a wide-ranging review of the Company’s operations with a view to driving revenues and improving its financial performance. The Board is pleased with the progress being made in this regard and with its wider initiatives. In addition, it has strengthened the Company’s Senior Management Team with a number of new appointments, including Nick Cullen as Chief Operating Officer. Ian Gray, a highly experienced business transformation specialist, has also been acting as a consultant to the Board since mid-January.
“The Company will be reporting on the half year ended 31 December 2016 on 31 March 2017 when a further update on its progress will be given. In the intervening period, the Board will continue to pursue current initiatives to the benefit of shareholders and views Gatemore’s requisition notice as disruptive to management efforts and focus.
“As previously confirmed, the Board of Directors currently intends, in accordance with section 304 of the Act, to call such a general meeting within 21 days of the receipt of the Requisition and to provide for such a meeting to be held on a date not more than 28 days after the date of the notice of such meeting.”
Gatemore has said that it has worked alongside other large shareholders of the business to find and vet four new candidates.
The candidates are: Ronald Series as chairman, Lloyd Dunn as non-executive director (effective 1 July 2017), Paul Goodson as non-executive director and Russell Black as non-executive director.
Liad Meidar, managing partner & chief investment officer at Gatemore, said: “As the largest shareholder in DX Group, we continue to see tremendous unrealised value in the business. DX is a trusted brand with leading a position in document exchange, secure delivery, and IDW freight, despite a precipitous decline in share value following a series of profit warnings. We are as eager as anyone to see DX succeed and we are confident that there is consensus amongst shareholders about the need for change.”