The man leading a challenge to the Sweett Group’s board has said he would not rule out taking the consultancy private again if he wins back the chairmanship – five years after he led the firm onto the Stock Exchange.
Francis Ives also told Construction News he was seeking legal advice after the group board issued a circular saying it had more than 50 per cent of support against his resolutions to oust the non-executive chairman.
Mr Ives, who needs a 75 per cent majority to succeed in becoming executive chairman, said he has no intention of backing down, and indicated he may challenge the board again if he loses after the general meeting on 9 May.
Mr Ives, who has a 4 per cent stake in the consultancy, is part of a group of shareholders with a total of 14 per cent of the firm who launched a bid in March to get him reinstated.
The board of the publicly listed Sweett Group responded through the markets, saying they would fight the move.
They then released a circular to staff on Wednesday announcing a general meeting and said they had secured 50.1 per cent of shareholder support against the challenge, while describing Mr Ives’ move as “motivated by emotion”, based on “a nostalgic return to his former position” and not in the best interests of the company or shareholders.
“They have got a business and set-up which could carry a business 10 times its size – is that in shareholders’ interest”
But Mr Ives said the company had not been delivering value to shareholders, and that he was also prompted to lodge the challenge after he was approached by other shareholders and had heard that current Sweett Group non-executive chairman Michael Henderson was planning to retire in August.
However, Construction News has learned that Mr Henderson, 74, intends to stand again for his position in the summer.
Mr Ives, 64, who led Sweett for 19 of his 40 years at the firm and took the company onto the Stock Exchange in 2007 before retiring in 2010, said: “A little bit of emotion is no bad thing.
“I did a lot to make it what it is and I don’t want to damage it; what I wanted to do originally was contact the board because the chairman was retiring.”
Mr Ives said the fundamentals of his plan include a strategic review of the business, looking at ways to make savings and cut overheads, leading to a turnaround plan and a stronger balance sheet.
Asked if that could mean restructuring, he said: “I don’t think so, but you never know. I have not been in the business for three years.
“Until you go into these reviews you don’t know what you’re going to find, but if that’s what it takes, that’s what it takes.”
He added that “the cost of being a listed company is not proportionate to the size of the company”.
“They have got a business and set-up which could carry a business 10 times its size – is that in shareholders’ interest?
“I’m not saying we would delist, albeit I’m not saying that won’t be on the table. There may be other ways of making the savings to make the cost proportionate without delisting.”
Mr Ives also said he was concerned that pressure may have been put on employees after company directors emailed staff for a proxy vote in advance of the notice of a meeting to build enough support to persuade Mr Ives to withdraw his action.
It is understood the email sent to staff said there was no obligation to provide a response to the advance vote.
“The group is extremely comfortable with its legal position”
Sweett Group spokesperson
But Mr Ives claimed his group’s argument “had not been put to them by the company” and said he was “taking legal advice to check the validity of what they are saying”.
He continued: “They are trying to get me to withdraw the resquisitions and I have told them we won’t. The change in company laws enables repeats of requisitions to be made, if at first you don’t succeed.”
A Sweett Group spokesperson said that after taking counsel’s opinion throughout the process “the group is extremely comfortable with its legal position”.
Mr Ives said he began to question the regime in September after the Sweett Group reported its first ever annual loss and breached its banking covenants, though the firm was granted a waiver from the banks. Sweett posted a profit in the 2013 half year.
Responding to the claim by the board’s circular that Mr Ives has “no cohesive strategy”, he said: “Going into battle, you don’t tell the opposition what ammunition you have got.”
He added he “does not disagree” that an executive chairman is not best practice for a plc, but said it would be part of getting the business “back into shape”.
The Sweett Group board circular said Mr Ives was no longer suited to the chairman role, as the global company is not the UK-centric firm it used to be, with 67 per cent of its record £102m order book overseas.
It said the company has made £2m of annualised cost savings from 1 April 2012 and is half way through its three-year growth strategy, remains well within its banking covenants and has significant headroom on its existing facilities.
The circular also says operational directors sent a letter to the board saying ““no one is closer [than us] to the day-to-day running of the European and Middle East operations and we are therefore somewhat bemused by his [Francis Ives’s] proposals”.
The circular, which also says Mr Henderson’s quality of leadership has been “second to none”, calls for all shareholders to vote against all resolutions at the general meeting next month.
Sweett Group’s share price was at 27.75p today, up from a low of 16p last July. When Mr Ives led the firm’s IPO, the shares were at 110p. They had dropped to around 32p by the time he left.