Western Gate Private Investments, which owns a 9.7 per cent stake in the central European spirits producer, attacked the company after Stock Spirits wrote to shareholders yesterday telling them to reject a number of proposals Western Gate made at the beginning of April.
Western Gate, which is headed by the European retail magnate Luis Amaral, made a series of requisitions ahead of the company's annual general meeting on 23 May, which included: ousting the company's chief executive, rejecting Stock Spirits' current strategy of pursuing mergers and acquisitions (M&As) across Europe and recommended the appointment of two non-executive directors - Alberto Da Ponte and Randy Pankevicz - to help turn around the company's ailing Polish business.
As a result of the row between the company and Western Gate, chief executive Chris Heath stepped down and took "early retirement" on Monday.
Western Gate said in a statement today: "In this response it has unfairly sought to discredit us, and made various unjustified statements about our intentions. We believe that the Board’s efforts would be better spent constructively focusing on turning around the Company’s business rather than needlessly attacking its largest shareholder."
Luis Amaral added: "I am the largest shareholder in the Company and share the same interests as all shareholders: to improve the performance of its business. Stock Spirits represents only 3% of Eurocash’s turnover and a negligible contribution to Eurocash’s attributable profit so the Board's claim that I have an overriding conflict of interest is incorrect and a distraction from the real issues which are the Company's financial underperformance and loss of market share.
“The two independent non-executive director candidates we are proposing are drinks industry veterans who have been assessed by Heidrick & Struggles as strong and independent and we believe should be welcomed by the Board. Their independence will ensure that there is no undue influence on the part of any shareholder and their knowledge and skills will bring a greater depth of expertise and support to the Board and help the Company to deliver value for all shareholders.”
Western Gate claim there are a number of reasons behind the requisitions, including the significant decline in market share that has seen it fall out of its leading position in the Polish vodka market, an underperforming share price which had halved from its peak of 315p to 154p, significant increase in corporate costs - up 111 per cent since 2011 and a culture of "group think" at board level.
Stock Spirits, which is the largest supplier of spirits in Poland and the Czech Republic, saw its revenues in Poland slide 10.3 per cent and pre-tax profits slump 35.9 per cent in 2015 amid stiff competition in the drinks market. As part of its turnaround strategy, the company is planning to increase its acquisitions in the European drinks market, which raised the ire of Amaral.