2 Cheap deal goes to vote
Shareholders at 2 Cheap Cars Group are being encouraged to approve a deal for David Sena to buy Eugene Williams’ stake in the company in order to avoid “the potential for further disruption and distraction from operating the business”.
The $4.3 million agreement between the pair will go to the vote at the company’s annual meeting on September 28. If approved it will increase the shareholding of Sena’s family trust to about 76 per cent.
Notice of the annual meeting has now been released and includes an independent adviser’s report by Simmons Corporate Finance on the proposed acquisition of Williams’ 30 per cent shareholding.
Michael Stiassny, 2 Cheap Cars’ chairman, says in the notice that if the transaction between the company’s co-founders is approved it will not affect the shareholding of any other shareholders.
He adds there is also no intention to change the board, management or operation of the business as a result of the deal.
“As many shareholders will know from the company’s announcements over the last year or so, there has been a relationship breakdown between Messrs Sena and Williams,” explains Stiassny.
“This has resulted in numerous disruptions to operations and governance, including change of the board, management, auditors, bankers and so on.
“To act in the best interests of all shareholders, it is imperative that the company is not exposed to the potential for further disruption and distraction from operating the business.
“The transaction meaningfully addresses this concern by removing the ongoing negative impact of that relationship breakdown. This is the key reason why your independent directors support the transaction.”
The adviser’s report by Simmons describes the rationale for the share acquisition as “sound” and says it is not in the best interests of other shareholders for the potential for conflict between Sena, pictured, and Williams to remain.
“In our opinion, after having regard to all relevant factors, the positive aspects of the share acquisition outweigh the negative aspects from the perspective of the non-associated shareholders,” it adds.
It continues that if the deal does not proceed, the risk of further adverse effects on the company due to the relationship breakdown between its two largest shareholders will not have been resolved.
“The Williams trustees may look to undertake a similar transaction to the share acquisition in the future or sell their 30.03 per cent shareholding to another party,” the report explains.
“Either approach will require shareholder approval or the prospective purchaser making a takeover offer. Either scenario will lead to the company incurring additional costs.
“Alternatively, the Williams trustees may continue to sell down their shareholding on-market. The overhang of such a large parcel of shares being offered for sale on the market is likely to place continued downward pressure on the company’s share price.”
In an effort to ensure as many shareholders as possible turn up for the annual meeting, 2 Cheap Cars has made it a hybrid event. People can either attend in person at Ellerslie Event Centre in Auckland or via an online platform.
