Lecram Holdings Limited, beneficial owner of a 5.16%% stake in Purplebricks, has accused the board of telling shareholders a selective story with the circular accompanying the notice of the General Meeting, to be held on 19 December.
Purplebricks bowed to growing pressure from Lecram Holdings, an activist investor, by announcing yesterday that it will hold a GM to consider the removal of Paul Pindar as chairman and the election of Harry Hill to the board.
On November 9 the online estate agency received a letter from Huntress (CI) Nominees Ltd., acting for Lecram Holdings Ltd. requesting the changes.
But the board urged shareholders to vote against the proposals. It said that the board has the support of a number of shareholders, including Axel Springer which owns 26.5% of its issued share capital.
Lecram commented: “The circular posted by Purplebricks today is notable for what it does not tell shareholders, to the point of being economical with the truth.
“The company selectively quotes Lecram to put out a misleading impression about our views. What we actually said in August was: ‘While we are encouraged by the plans of the new CEO and CFO to turn things around and stem the cash bleed, we wonder why it has taken so long to act and are concerned that the lack of market experience at board level…’. Our comments highlighted the concern about execution risk while the chairman that led Purplebricks into this dire situation is still at the helm.
“The biography of Paul Pindar misses out a critical element of his career details, namely his chairmanship of Eve Sleep, a quoted ‘disruptor’ of the mattress market where shareholder value was destroyed under his watch and which recently went into administration. We wonder why this was not highlighted to investors.
“The letter from shareholders is signed by Simon Downing, who is described as the Senior Independent Director of Purplebricks, but conveniently does not point out that he is also a director of the Pindar family investment business, Literacy Capital. We therefore question his independence in this matter. https://www.literacycapital.com/team/board-of-directors/default.aspx
“Purplebricks states that Axel Springer, the 26.5% shareholder in the Company, has provided an irrevocable undertaking to vote against both resolutions. We question the motive for Axel Springer, which has had board representation for a number of years and has, by its own admission, significantly written off its near £200m investment, is giving this undertaking.
“The Company has given no further detail on its turnaround plan. There is no evidence that Purplebricks’ market position is improving, no evidence that the cash bleed is being stemmed, and the falling share price, which implies the business is worth no more than the cash on its balance sheet, shows the market has lost confidence in the leadership of the company.
“It is clearly time for a change at the top at Purplebricks before it is too late. We strongly urge independent shareholders to vote in favour of both resolutions – to remove Paul Pindar and to appoint Harry Hill to the board, with the view to him becoming chairman.”