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Article from *:
https://unauthorised investment adv...eholders-ignore-asg-car-crash-fight-takeover/
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Kenneth Carr is rallying the troops at 4WD mechanic Automotive Solutions to fight off a second takeover attempt from crash repairer AMA Group.
Chairman Carr urged shareholders on Friday to take no action on AMA’s latest off-market bid of 35c a share, saying it was about a third lower than the company’s $1 issue price a year ago.
Automotive’s shares jumped from 22c to 34c on Thursday after the offer was made. The shares opened Monday at 33.5c.
AMA, which lifted its stake in Automotive (ASX:4WD) to 31.3 per cent last week, first launched the takeover bid in May.
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AMA cited poor financial performance and board disunity as reasons to support its bid, noting the company had changed its CEO and CFO, gained and lost chairmen twice this year, and had “engaged multiple apparent turnaround specialists and contractors”.
AMA said there were “two warring factions fighting for control of the board with two extraordinary general meetings to be held at different times on 13 November 2017 and in different locations”.
Automotive’s board was replaced last month. It gained a CEO in August, a chairman in Dr Carr two weeks ago and two new directors.
“The board was, for want of a better word… incapable of seeing eye to eye on certain issues,” Dr Carr told *.
The meeting requests have been withdrawn and the old directors resigned when they realised they were “part of the problem”.
Dr Carr expects the independent expert to report back in early December and the board will make a recommendation then.
He says it’s too early to present shareholders with a turnaround plan since the new board has only been in place for two weeks.
“I was appointed on the Friday afternoon. On the Monday morning we were given an injunction and in the following two days the rest of the board resigned.
“Realistically, there was a lot of things going on in that first week.”
“I can’t give you an appropriate financial update until we’ve completed the independent expert report.”
No shareholders on this board
The new board can’t buy shares in the company, yet.
“None of the board hold shares, it will therefore be entirely your decision about your investment, we will endeavour to give you the information you need to make that decision in our formal response,” Dr Carr said in his letter.
He told * that while they would love to buy stock in Automotive, there are “certain things happening in the company that haven’t been announced to shareholders” so ASX rules say they have to wait.
Dr Carr admitted the business had disappointed since it listed in December 2016.
Automotive banked $7.8 million in sales last quarter, down from $10.6 million in the June quarter.
Operating cashflow fell into negative territory in the latest quarter at a burn rate of $579,000 compared to a $763,000 surplus last quarter.
The group expected outgoings of $8.4 million this quarter and had $1.2 million in the kitty.
Automotive’s shares dived 63 per cent after it slashed profit guidance in April as three business divisions of eight failed to deliver on revenue expectations.
AMA has been contacted for comment.