In a statement released today (31 March), Crystal Amber stated that it has sent to the board of De La Rue a requisition notice requiring the security printing PLC to convene a general meeting at which a resolution will be proposed to remove non-executive director and chairman Kevin Loosemore.
The requisition also proposes to appoint Pepyn Dinandt as a non-executive director and chairman.
Crystal Amber has been a shareholder in De La Rue since 2018 and currently holds around 9.8% of the company’s total issued share capital.
Further stating its background and reasons for the requisition, Crystal Amber said: “Crystal Amber notes that De La Rue's current market capitalisation is £103m. This is after the July 2020 equity fundraise of £100m, meaning that since July 2020, the like-for-like valuation of the business has fallen to £3m. Prior to the fundraise, the market capitalisation was £125m.
“Crystal Amber notes that on page 14 of De La Rue's interim results released in November 2022, a reference was made to a material uncertainty going concern audit qualification. This relates to potential banking covenant breaches.
“Crystal Amber notes that in December 2022, it wrote to the directors of De Le Rue in a personal capacity. In that letter, Crystal Amber highlighted several specific concerns, including the effect on revenues and profits of making 300 staff redundant at the Kenyan print facility and ceasing print operations.
“The directors of De La Rue wrote to Crystal Amber to deny this. However, on 20 January 2023, De La Rue announced the closure of its Kenyan print facilities. Whilst the announcement said that this closure was not expected to affect revenues to 31 March 2023, it made no reference to the effect on revenues for the year commencing on 1 April 2023. Prior to the closure of the Kenyan print facilities, the revenue from Kenya comprised around 12% of total revenues from the Currency division of De La Rue.”
The statement continued: “Crystal Amber notes that in the period to 26 March 2022, after the £36m cost cutting, De La Rue's pre-tax profits from continuing operations were £24.2m. The current market consensus estimate for the year to 31 March 2023 for De La Rue is for pre-tax profits of £22m.
“Crystal Amber believes that unless it takes immediate action, De La Rue's audit report for the year to March 2023 is likely to include a material uncertainty going concern qualification. This could have an adverse impact on De La Rue, not only as regards tendering for new contracts but importantly for retaining existing customers and contracts.”
Then reiterating its belief that “an immediate change of leadership is required”, it outlined its case for Pepyn Dinandt, who it said “has spent almost 20 years working on behalf of and with private equity firms including KKR, Apollo and Towerbrook”.
“He has a long and successful track record in building businesses by delivering on value creation programs and securing exits. He is currently chief executive of the Climate Control Systems and Automotive Controls division at the Eberspaecher Group, a very large family-owned Tier 1 automotive supplier. By the end of 2023, this global division is forecast to have approximately €900m [£790m] revenues and 3,500 employees.”
Crystal Amber added that De La Rue is “naturally placed to lead industry growth, given the right strategy and operational execution” and that this requisition “seeks to honour these characteristics and the strategic value they give to De La Rue and to protect them for De La Rue's shareholders and stakeholders”.
Crystal Amber had previously continued its criticism of De La Rue last week, at its own half-year stage, and it has also previously called for Loosemore to resign.
In response, De La Rue also stated its own position. It said: “Shareholders will recall that at a general meeting called in December last year in response to a request by Crystal Amber for Kevin Loosemore to resign, 94.9% of the votes cast, excluding the votes cast by Crystal Amber, were in favour of Mr Loosemore continuing to serve as a director of the company and as chairman of the board.
“In July last year, 97.8% of voting shareholders voted to re-elect Kevin Loosemore as chairman at the company's Annual General Meeting.
“The board is considering the contents and legality of the requisition notice and further announcements will be made as appropriate. Shareholders are advised to take no action with respect to the requisition notice at this time.”
De La Rue’s share price dropped by over 7% to 51.1p this morning (52-week high: 118.80p).
