Samuel Tak Lee, the Hong Kong billionaire who owns a 25.02% interest in Shaftesbury PLC's issued share capital through a number of controlled entities, intends to vote against the company's right to undertake further issues of shares at the next annual general meeting Feb. 9.
Shaftesbury completed a share placement in December 2017 representing approximately 9.98% of its issued share capital as at Dec. 5, raising roughly £265 million in gross proceeds to finance acquisitions in London, among other purposes. Shares were issued at a discount before costs of 4.90% to the Dec. 5 closing price.
In a statement from Lee that was circulated by the company at his request, the shareholder took issue with the "non-preemptive offering at a material discount to the market price and the manner in which shares were then allocated."
Lee noted that the company has undertaken nonpreemptive placements of roughly 10% of its issued share capital on three occasions in the past seven years, with the principal recipients of the new shares being institutional investors, "compounding the inequitable treatment of existing non-institutional shareholders."
"In this instance, I believe that Shaftesbury's Board failed to take adequate account of what was in the best interests of all of its shareholders, both institutional and individual," Lee said.
Lee also noted a Jan. 15 letter from Hogan Lovells, the solicitors of Shaftesbury, that said the company and the joint book runners "had complete discretion in the allocation of shares and had no legal obligations to any existing shareholders" regarding such an allocation. Lee also pointed out that the board "simply refused" to provide information on certain points.
The shareholder said he intends to vote against resolutions 16, 17 and 18, which propose to renew the board's right to undertake further issues of shares, pre-emptive or otherwise, at the 2018 annual general meeting and encouraged all other shareholders to vote similarly if they "wish to avoid dilution as a result of new issues of shares."
Shaftesbury, meanwhile, said it does not agree with Lee's statements and recommended that shareholders vote in favor of all the resolutions to be proposed in the notice of the annual general meeting.
The company noted that resolutions 17 and 18 — which authorize the directors to allot shares in certain circumstances on a nonpre-emptive basis — require the approval of at least 75% of the votes cast, and the company would not be able to issue shares on a nonpre-emptive basis if Lee votes against them. Resolution 16 authorizes the directors to allot shares in the company's capital and requires the approval of more than 50% of the votes.
