Support for 2 Cheap share deal

The New Zealand Shareholders’ Association (NZSA) is backing a proposed deal for Davd Sena to increase his stake in 2 Cheap Cars Group by buying all the shares held by his fellow co-founder, Eugene Williams.

The NZSA says it will vote all undirected proxies it holds to approve the transaction after Sena agreed to include provisions that protect the interests of minority shareholders.

Under the proposed arrangement, Sena will buy about 30 per cent of shares from Williams to take their holding in 2 Cheap Cars to about 76 per cent.

The move follows a breakdown in relations between the pair last year that led to Williams and three independent directors resigning from the company’s board en masse.

A vote on whether the deal is approved will take place at 2 Cheap Cars’ annual shareholder meeting on September 28.

In making its recommendation, the NZSA says the additional measures agreed to by Sena include not utilising the “creep” provisions of the Takeovers Act for a period of three years from the date of the share acquisition.

He has also undertaken to maintain a majority of independent directors on the board and will enable consultation with minority shareholders and their representatives prior to the appointment of future independent directors.

The NZSA adds the commitments “provide greater scope for effective, independent governance creating better alignment between the interests of Sena and minority shareholders”.

Oliver Mander, NZSA’s chief executive officer, says the approach of Sena and Michael Stiassny, chairman of 2 Cheap Cars, has been “proactive and professional”. 

“As far as we are aware, these commitments are a first for an NZX-listed company and go some way to encouraging greater alignment between the interests of major or controlling shareholders and minority shareholders.”

Stiassny adds having support for the transaction from the NZSA was welcome and confirmed the view of the board, which has recommended the transaction be approved on the basis of an independent adviser’s report. 

“We firmly believe this transaction is in the best interests of all shareholders,” he explains.

“David is already deeply invested in the success of this company and has made a signficant contribution to its transformation and increased profitability in recent months, as evidenced in upgraded guidance released on September 8.”

The annual shareholder meeting for 2 Cheap Cars will be held at Ellerslie Event Centre in Auckland and online from 10am on September 28.