Corporate: Hell hath no fury like Smiles Inclusive’s chairman scorned; board spill trigger pulled
Smiles Inclusive (ASX:SIL) dumped its chairman two days ago and now he’s on the warpath, calling a motion to spill the whole board.
Now an 18 per cent shareholder, as of the day he was sacked, David Herlihy and the recently removed CEO Mike Timoney want the new chair gone as well as board member Tracey Penn.
Mr Herlihy is still on the board, as is Mr Timoney.
Smiles said the business performed “well below expectation… under their leadership” and the appointment of a new CEO was seen as a way to “start to address many operational matters”.
Those ‘operational matters’ were the massive $3.3m profit downgrade that saw the company expected to make a profit swing to a forecast of a $1m loss.
This came a couple of days after Smiles’ bankers said they’d overlook breaches of loan conditions.
Even though Smiles only listed in April last year it’s been shadowed by problems, including a legal dispute in a business it acquired in the IPO.
Smiles shares are actually off 52-week lows on the news, jumping 9 per cent to 18c.
Smiles said Mr Timoney had made noises about calling a shareholder meeting after he resigned in February.
Ms Penn, new board member Peter Evans, and the now-chair David Usasz sent him a letter “outlining a number of concerns about Mr Timoney’s and Mr Herlihy’s behaviour in connection with the company and expressing the view… that the meeting and the resolutions would not be in the company’s best interests”.
Mr Usasz and Ms Penn offered to resign from the board if Mr Herlihy did too, and the new CEO Tony McCormack was appointed as a director.
But Mr Timoney rejected that olive branch and the board spill notice was still issued, thanks to Mr Herlihy’s sudden ascent to Smiles’ largest shareholder.
“Unfortunately the responding directors do not consider any scenario where: Mr Herlihy remains a director on a smaller board; or Mr Herlihy, Mr Timoney and their nominees have a majority of board seats, to be in the best interests of the company,” Smiles said.
“Mr Timoney failed to elucidate any clear or compelling plan to improve the company’s performance, either as CEO or subsequently.”
My Timoney has been contacted for comment.
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