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Grubby boardroom shenanigans at The Market Herald laid out by the Takeovers Panel
Welcome to a Friday update. Below, the findings of The Takeovers Panel tell an ugly story about the battle for The Market Herald, and Seven’s ASX woes worsen.
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In the Market Herald boardroom, shame is in short supply
Tim Burrowes writes:
Eye-opening reads can sometimes be found in unexpected places.
Take the unpromisingly titled Takeovers Panel document “Reasons for Decision - The Market Herald Limited  ATP 7” published this week.
In 75 pages, the document raises serious questions about the conduct of several of those battling for control of The Market Herald, and indeed the behaviour of one of the giant law firms involved.
A year ago, TMH was on the way to being the most significant media company you hadn’t heard of. Along with its video and text coverage of small cap ASX stocks under the Market Herald banner, TMH owned share trading forum Hot Copper and was just about to buy classified sites Gumtree, Carsguide and Autotrader. Also planned was the launch of a national weekly newspaper.
How we covered TMH’s arrival on the scene last September:
In the months since then, boss Jag Sanger was ousted in messy circumstances, the share price has fallen 30%, the two biggest shareholders have turned against each other and the Takeovers Panel has now accused several of those involved of dubious behavior to say the least.
BOTW: Exclusive - Inside the The Market Herald's civil war; winners have parties; Media agencies' $8bn year
The new document from The Takeovers Panel spells it all out - and also explains why it took so bloody long to complete its investigations. It was hampered by those it was investigating.
At the heart of the Takeovers Panel investigation was the relatively technical question of whether father and son David and Gavin Argyle, who are both shareholders, were working together, and why this was not disclosed to the market. Although it might seem an obvious assumption to make about family members, the ASX has strict rules about shareholders declaring their allegiances, particularly if it could affect control of a company.
Through their various holdings, the Argyles had control of just under 47% of the company. David Argyle owned 36.9%, Gavin Argyle 6.5% and Rebecca Argyle 2.75%. Gavin Argyle is also a director of the company.
Meanwhile, rival shareholder Duncan Saville owned 23.1% through his company UIL. The Takeovers panel investigated at the request of UIL.
The issue of the Argyles working together became more crucial when TMH conducted a fund raising to purchase Gumtree, Carsguide and Autotrader (GCA) in a way which was likely to see the Argyles grow their stake without other shareholders being aware.
The investigation also raised serious questions about the actions of chairman Alec Pismiris. Although any ASX chairman is supposed to be independent, representing the interests of all shareholders, the Takeovers panel uncovered evidence that Pismiris assisted the Argyles in the process of ousting Sanger.
As the report unfolds, it becomes clear that the panel found Argyles to be full of it. Or as, the panel more gently put it, “it was not an isolated” occurrence for them to be caught out in their claims.
While the report does not go deeply into the reasons why the Argyles wanted Sanger out, it appeared to be because they saw him as a threat to their own interests. They raised a question about intra-company cash transfers, and although the issue was discussed by the board and apparently dealt with, Argyle appeared to want to use it as a way of ousting Sanger.
So instead, at the end of November the Argyles used ASX rules to issue what is known as a 249D notice to vote on ousting Sanger from the board. Sanger resigned about three weeks later.
The Takeovers Panel uncovered evidence that Pismiris - who has been in business with Gavin Argyle previously - was the one who suggested issuing the 249D notice against Sanger.
Pismiris then assisted with drafting the notice. TMH later claimed this was because David Argyle didn’t have access to his own secretarial help. “We consider that Mr Pismiris was not independent of Mr Gavin Argyle and Mr David Argyle and was actively assisting them to remove Mr Sanger as a director,” ruled the panel.
Pismiris attempted to justify his involvement in Sanger’s ousting by claiming that he became aware of new concerns about Sanger. The Takeovers Panel didn’t buy this, saying Pismiris failed to back up this claim “despite abundant opportunities to do so”
The Takeovers Panel was also critical of attempts by TMH to prevent Sanger from assisting its investigation. TMH held Sanger to confidentiality clauses in his employment contract, forcing the Takeovers Panel to get court orders to allow Sanger to speak.
And the panel also questioned the conduct of law firm Clayton Utz which was acting for Gavin Argyle’s company GAB and also for TMH but did not reveal this to the panel. “We would have expected (at the least) more candour from Clayton Utz”, said the panel.
After Clayton Utz pushed back saying it was “deeply concerned” by the finding, the panel put it even more strongly, accusing Clayton Utz of “clear shortcomings”.
The report makes clear that the panel feels it was stonewalled by TMH. “We would have expected a more candid approach to disclosure than has been adopted by TMH. The iterative process that was required for us to obtain relevant information has unnecessarily elongated these proceedings .”
And yet… in the TMH boardroom, little has changed. Although the Takeovers Panel ordered that the Argyles would have to dispose of some of the shares acquired during the fund raising process, they remain the biggest shareholders.
And inexplicably given how comprehensively the panel demolished his ability to claim to being independent, Pismiris remains as chairman. What does it take for some people to resign?
Markets punish IVE and ARN results
The stock market was unimpressed with yesterday’s results announcements from IVE Group and ARN Media, with their share prices falling 8.75% and 6.63% respectively.
The three largest stocks on the Index led the board, with Domain scoring a 3.02% lift in share price, while Ooh Media and Nine rose 1.01% and 0.49% respectively.
The overall Unmade Index dropped 0.20% to land at 647.1 points.
Meanwhile, Seven’s beleaguered share price took another hit, falling another 4.76% to its lowest point in nearly three years.
Time to leave you to your Friday.
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I’ll be back tomorrow with Best of the Week, including an assessment of all the media and marketing stocks that reported this week.
Have a great day.
Publisher - Unmade