A group of minority shareholders in Ardagh Glass Ltd have instructed solicitors to see if they can take out a minority protection action against Ardagh company directors over the takeover by Caona plc…
A group of minority shareholders in Ardagh Glass Ltd have instructed solicitors to see if they can take out a minority protection action against Ardagh company directors over the takeover by Caona plc. The shareholders are unhappy at the Ardagh Glass offer of EUR 4 per share and claim that the company board has not provided sufficient information for them to judge if it is fair price. Caona is a special purpose company controlled by a number of Ardagh“s large shareholders. The largest stakes are held by businessman Paul Coulson and his investment company Yeoman. Members of Ardagh management and some directors also have shares in Caona, which claims to have received acceptances for its offer from shareholders holding in excess of 96% of the company. Having passed the 75% threshold that exists under the law in Guernsey, where Ardagh Glass is registered, the owners of Caona could compulsorily acquire the remaining shares. Ordinary shareholders in Ardagh are being allowed to convert 10% of their holdings into shares in Caona. John Collins of solicitors Donal Reilly & Collins said the firm had been instructed “to investigate if we can bring minority protection proceedings against the directors. Any such action is predicated on establishing that the true value of the shares is greater than the amount offered by Caona”. He said his firm represented more than 2% of Ardagh“s approximately 700 shareholders. He said the shareholders had asked to see the minutes of the directors“ meetings at which the value of the company was discussed before the offer from Caona was accepted, a move rejected by the company, Mr. Collins said, because under Guernsey law the shareholders had no right to see the minutes. The minority shareholders also say that no independent directors“ report or recommendation was made available to the shareholders, although Ardagh says this is not a requirement for a Guernsey-registered private company. In a statement issued 13 March 2005 Caona said its offer had now been accepted by shareholders owning 96% of the company, including the shareholders represented by Mr Collins. “They wanted to accept on the condition that they were seeking to mitigate their losses but were told that their acceptances would only be accepted on the basis of the terms and conditions of the offer. They then accepted the offer,” according to the statement. Responding to Caona“s statement, Mr Collins said: “The dissident shareholders believe Caona has got Ardagh at a bargain. They have accepted the offer to ensure they get some shares in Caona, to share in Caona“s bargain.” “They are acting to mitigate their loss. The acceptance of the offer by the dissident shareholders does not release the directors from their responsibilities. The absence of an independent assessment of the valuation is the issue.” Ardagh Glass was divested from Ireland“s Ardagh plc (since renamed South Wharf plc) in 2003 and taken private at a valuation of EUR 1.10 per share. It comprised the manufacturing assets of the business and since then has grown significantly through a series of acquisitions. In 2004, it made profits of EUR 20 million on turnover of EUR 444 million. A bond document issued by Caona puts the shareholders“ funds at EUR 65.4 million, valuing it at around EUR 4.40 per share when generous options granted to management are added to the 13.3 million shares in existence. Caona is raising EUR 125 million, secured on the assets of Ardagh, to fund the takeover, which needs approval at an extraordinary general meeting of Ardagh. After the Caona takeover Yeoman will have a 45% stake, while Mr Coulson (who owns 33% of Yeoman) will hold 25% and other management and directors will hold 15%.