Source: Business Wire
Friday, July 30, 2010 10:17 AM IST (04:47 AM GMT)
Editors: Business: Accounting & management consultancy services, Banking & financial services, Business services, Financial Analyst, Stock exchanges
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(BW)(TRIKONA-ADVISORS-LIMITED)Trikona Advisors Limited Issues Letter to Shareholders of Trikona Trinity Capital Plc
Mumbai, Maharashtra, India, Friday, July 30, 2010 -- (Business Wire India) --
Trikona Advisors Limited (TAL) today issues the following letter to shareholders of Trikona Trinity Capital Plc (TRC.L) for their consideration:
Dear Trikona Trinity Capital shareholder,
We write to you to as one of the largest shareholders in the Company. We are also the people who conceived, spent years of time and effort and created Trikona Trinity Capital "TTC" and we therefore have the most intimate knowledge of the Company's portfolio assets and their value.
The decisions that the Board has taken, some of which are mentioned below, suggest to the prudent observer that the Board has failed to act in the best interest of shareholders like you. For example, this is what the Board has recently done:
1. Tendered 18.7 million shares of Pipavav Shipyard Ltd at Rs. 61.5 per share, being 40% of its holding, without revealing to you that the average price of this share on 25 June (the last working day before the close of the offer) was Rs. 97, thereby implying a discount of 36%.
2. Sold its entire holding in ILFS Transportation Networks Ltd., a leading transportation and infrastructure company through an open offer in the IPO at Rs. 258 per share. The current price is Rs. 296. (Closing price on July 28, 2010).
3. Sold the entire holding in Phoenix Mills Limited in November 2009 at Rs. 170 per share. The current price is Rs. 224.
4. Decided, in June 2010, to dispose off the shares of D B Hospitality for about Rs. 100 Crore. This is approximately the amount that was invested, thus generating a negative IRR. This despite the Company having made progress in the last three years in various underlying projects, and acquiring a few new projects in the SPV, which will significantly improve the valuation and the company is also in the process of launching an IPO.
While it may appear at first glance that there is no logic to these decisions, closer scrutiny suggests that there is consistency in the current Board's actions. While the declared investment policy (approved in EGM held in March 2009) is to maximize shareholder value which reads as, "The Company shall promptly but having due regards to all applicable legal, governmental and regulatory constraints and with a view to maximizing shareholder value, dispose of all its assets in an orderly fashion." The Board has consistently sought to achieve rapid realization rather than maximize the return to shareholders like you. This is corroborated by the above examples and the following:
1. The new portfolio manager sought to be appointed, is promised an annual management fee of 2 million dollars, plus a performance fee of 7.5 % of the net asset realized. There is no relationship between the fees and the return to the shareholders. This means, Indiareit can make handsome profit even if shareholders don't make a gain.
2. TTC, since appointment of the new Board has always maintained the stand that Mr. Adams & Mr. Verma are Non-executive Directors but the way their remuneration package has been structured speaks of almost 250 days of full time work by each of them bringing their part time Non Executive position in doubt. The compensation other than Directors Incentive Plan is huge and has never been brought to the notice of the Shareholders and is being sought to being approved retrospectively. This is way beyond the previous Remuneration Committee's pay grades for non-executive directors and the Chairman respectively.
To illustrate the point we have set out below the total Directors Fees for the last three years compare with the proposed payment of £ 1,092,500 for Mr. Adams and Mr. Verma. The fees proposed for Mr. Adams and Mr. Verma are 10 times what was paid to all the directors of TTC in previous years, see table below:
Total Directors Fees (2006-2007): £ 110,000
Total Directors Fees (2007-2008): £ 138,000
Total Directors Fees (2008-2009): £ 183,000
3. The huge proposed incentive plan for non-executive directors, which we TAL objected to, among other shareholders we are informed and are glad that the company has presently withdrawn this for reconsideration per the recent RNS announcement by TTC.
4. The unwarranted litigation in several jurisdictions initiated by the Company has caused a substantial loss in terms of money and reputation, and could potentially create large liabilities for the Company. In its dispute with TAL the Company has claimed:
(i) that TTC is "pursuing a claim against TAL for damages arising from TAL's breaches of the PMA". This is false. No claim has been made by TTC for loss and damage. TTC cannot advance such a claim because no loss has been suffered.
(ii) that TAL "may" bring a claim against the Company. In fact, TAL has already brought a claim of GBP 112 million and is the company's largest contingent creditor.
5. It has come to our notice by public documents and newspaper articles that the current Board of TTC may not really be independent and the composition of the board should be changed - It has come to our notice Mr. Adams was nominated to the board by QVT, It has also come to our notice that Mr. Verma was an employee or consultant of Carrousel Capital. Further it has been brought to our notice that Mr. Coe has been recommended to sit on the board of Cadogan Petroleum which is also under attack by activist shareholders as it is made clear in the FT (Financial Times) article of May 30th 2010 ".Stephen Coe, an accountant being recommended by Weiss to join the Cadogan board, was appointed by QVT as a director of Trikona last year." It has also been brought to our attention that Mr. Pahwa is an ex- employee of the new manager Indiareit and is currently the CEO of SRM Realty Advisors which is the Investment Advisor of SARE Ltd. a potential competitor of TTC. TAL is glad to see that the board of TTC is starting to recognize these facts and has announced in it recent RNS that it will look to review. Strengthen "... and the optimum composition of the Board in the future"
6. You are all aware that at the last Extraordinary General Body meeting held on March 24th 2009, a group of activist shareholders proposed a new investment policy, which was approved. And the press reported that this is a "....decision that could lead to the winding up of Trikona Trinity Capital." 1You will also recall that the some of the previous board members of the company including the chairman a very well respected and renowned professional resigned on July 14th 2009 without much of an explanation.
7. It is for you to consider, based on the facts given above and in public domain, whether all the decisions of the Board are intended to serve the agenda of some particular shareholders rather than the ordinary shareholder like you.
We hope that you would join us in the fight for our rights as shareholders as needed.
Trikona Advisors Limited (TAL)-A Shareholder in TTC
1 http://www.vccircle.com/500/news/advantage-hedge-funds-trikona-trinity-capital-to-sell-assets
CONTACT DETAILS
CONTACTS :
Trikona Advisors Limited
Pravin Rathod, +91 22 6780 4800
pravin@trikonacapital.com
KEYWORDS
CONSULTANCY SERVICES, BANKING, BUSINESS SERVICES, Financial Analyst, STOCK EXCHANGES
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