The brinksmanship between Abano Healthcare Group and two shareholders owning 19 percent of the company continues, with 15 percent shareholder Peter Hutson rejecting a bid from Abano for the 50 percent of Bay International that he owns.
Abano owns the other half of Bay, a chain of audiology businesses, and is offering $12.9 million in an unconditional cash offer, which the company says would resolve "all current management, governance and ownership issues."
However, a spokesman for Hutson and fellow rebel shareholder James Reeves, said they would not be entertaining the offer and that their objective remained the unseating of incumbent chairman Trevor Janes.
"This is a red herring that is designed to deflect from the core issues namely that of the poor performance of the Dental division and the increasing failures in corporate governance," the spokesman said.
Hutson and Reeves, acting as Healthcare Industry Ltd and Steamboat Capital, have given Abano until April 16 to respond to their call last week for a special shareholders' meeting to rerun the part of the Nov. 26 annual meeting at which Janes was re-elected chair.
Abano, and Janes himself, have ruled out that happening. At this stage, Hutson and Reeves have only called for the meeting and have yet to set in train the process that would require a meeting to be held.
An extraordinary general meeting can be called at the request of 5 percent of a company's shareholders, which the pair's shareholdings easily exceed. They have nominated May 27 for a shareholders' meeting.
Both sides claim high levels of institutional investor support for their stances.
Hutson was a director of Abano last September during an attempt by Hutson and Reeves to mount a full takeover bid for Abano pitched as high as $7.80 a share, but which Janes rejected, relying in part on a report by investment house Grant Samuel, which Hutson and Reeves says gave an inflated valuation.
They issued an alternative valuation report from Korda Mentha, which valued Hutson's Bay Audiology stake at between $6.3 million and $9.4 million, compared with the $12.9 million cash offer made by Abano today.
While Hutson and Reeves argue Abano has ballooning debt levels, the company's chief operating officer, Richard Keys, told BusinessDesk today the company could afford to pay cash for 50 percent of Bay, using uncommitted bank funding lines of up to $50 million, and that the company have banking covenant headroom for such a transaction.