Stock Spirits faces shareholder showdown as top investor calls for chief executive to quit
Stock Spirits Group is facing showdown with shareholders after one of its biggest investors called for the vodka maker to oust its chief executive and nominated two non-executive directors to help turn around its core Polish business.
Western Gate Private Investments, which has a 9.7 per cent stake in Stock Spirits, represents the private family office of Portuguese businessman Luis Amaral, the owner of Eurocash, Poland’s largest food wholesaler and a significant customer of Stock Spirits.
It has written to other shareholders today, urging them to vote in favour of removing Chris Heath at the annual general meeting on 17 May, and to hire an executive search firm to find a replacement.
Westgate has also proposed that two industry veterans – Alberto Da Ponte and Randy Pankevicz – be appointed to the board as independent non-executive directors to add “relevant experience, competence and fresh perspectives”.
Stock Spirits, the biggest supplier of spirits in Poland and Czech Republic, floated on London’s Alternative Investment Market in October 2013 at 235p, giving the company an initial valuation of £470m.
However, shares have since slumped by more than a third since its market debut, as stiff competition in its biggest market, Poland, followed by a profit warning in November, left shareholders with a nasty hangover.
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Western Gate said a recent root and branch review of Stock Spirits Polish operations by management “contain nothing new” to tackle problems in Poland.
“Financial performance has been poor, market share has been lost in its core Polish market, salaries and costs are too high and remote control management of the business from the UK, where the company has no major revenue generating operations, is clearly not working," Aramal said.
"The executive team consistently blames others instead of being on the ground in Poland addressing the local market dynamics and managing the business. A fresh perspective on the board will benefit all stakeholders," he added.
Stock Spirit confirmed it had received notice from Western Gate proposing certain resolutions at the AGM, and said that – as the largest shareholder in Eurocash, one of Stock Spirits' largest customers in Poland – Aramal's involvement presented a conflict of interest.
“Given this conflict of interest, the company does not believe that Amaral's and Western Gate's interests on the management and strategy of the company are necessarily aligned with the long term interests of all minority shareholders as a whole”.
The company also argued that it has taken steps to improve its performance in Poland, saying that sales in the second half of the last financial year showed a clear improvement on the first half. Stock Spirits also questioned the choice of Alberto Da Ponte as an independent director, claiming that Da Ponte has worked with Amaral in the past.
It has advised shareholders to take no action.