Two shareholders of debt-laden pharmaceutical group Ascendis have called for a general meeting to appoint new non-executive directors.
Mergence Investment Managers and Acanthin Capital, which collectively hold about 11% of the group, said they are pushing for the change to the board as they believed the people they wanted to see appointed could improve its performance.
“They have a track record when it comes to turning business around,” said Mergence chief investment officer Brad Preston.
Its poor performance saw its share price fall from a high of around R28 a share in September 2017 to its current pricing of about R4.13 a share. “There has been significant value destruction,” said Preston.
The slump in its share price forced Coast2Coast, the holding company of former non-executive director Gary Shayne, who co-created the pharmaceutical group in 2008, to significantly reduce its holdings after it made loans against its shares, to underwrite Ascendis’s R750m rights offer in 2017.
After its share price had fallen 83% over the past year, Coast2Coast was forced to reduce its holdings from 53% to about 8%, resulting in Shayne resigning as a director in March.
Mergence became a shareholder in the group in December and has since been in talks with the board to bring in new non-executive directors. “We took this holding with a view to drive change,” he said.
Shayne said Mergence had already spoken to shareholders, who collectively held 53% in the group, and from its interactions with them, it surmised there was broad support for appointing new non-executives.
Preston said it was no secret Ascendis had grown through acquisitions but now it had to change direction. He said the people they were looking to appoint, could make a real difference, as they could advise on integrating its different businesses and drive organic growth.
Despite being in negotiation for some time, Preston declined to elaborate on why Mergence decided to push for a general meeting to change the composition of the board.
Ascendis CEO Thomas Thomsen was out of the country and could not be reached for comment. The group said: “The board and its nominations committee are currently assessing the proposal, following which certain changes to the non-executive composition of the Board will be put to Ascendis Health shareholders for approval.
“An announcement setting out further details will be made on SENS in accordance with the timelines required by the JSE listings requirements,” it added.
Although there were already plans by Ascendis to sell off some of its assets, Preston insisted Mergence was not looking to create value for its shareholders by selling off the best bits of the pharmaceutical group. “There is no corporate raiding or asset stripping.”
Correction: April 26 2019
A previous version of this article stated that Ascendis reported an operating loss. The group, in fact, made a profit.
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