Role at Hanover haunts Muir

Some shareholders say they have no confidence in Greg Muir (left) after the role he performed at Hanover, co-founded by Mark Hotchin (right). Photo / Brett Phibbs

Some influential Pumpkin Patch shareholders want chairman Greg Muir removed from the board because of his role with failed finance company Hanover - a company which has left thousands of investors out of pocket.

But the children's clothing retailer says it stands behind Muir and one fund manager believes he has been used as a "scapegoat" for the Hanover debacle.

Muir, who has been chairman of Pumpkin Patch since it listed in 2004, is standing for re-election at the annual meeting in Auckland on November 23.

He was appointed chairman of Hanover in December 2005 and resigned in October 2008 - three months after Hanover Finance and sister company United Finance froze interest and principal repayments to 16,500 investors owed $554 million.

Since then, investors first approved a moratorium and then agreed to sell the assets to Allied Farmers in December 2009 in a deal valued at $396.2 million.

But as of June 30, Allied had written down the value of the assets to just $94.3 million and its share price has plunged.

Paul Glass, principle of Devon Asset Management, which manages money on behalf of investors, said its decision not to support Muir was "ultimately a judgment call".

"We are very uncomfortable with the role he performed at Hanover," he said.

Milford Asset Management's Brian Gaynor said he was also very unhappy with Muir's decision to stand for re-election. His role at Hanover Finance was "a major reason for that".

Gaynor said Muir had also played a major role at The Warehouse when the company made its disastrous investment into Australia.

Shareholders Association director Des Hunt said Pumpkin Patch was a great company but it would be encouraging its members to vote Muir off the board.

"We have no confidence in Greg Muir after his performance at Hanover. The Hanover thing is not finished - it just sends the wrong signal to people around the world and investors who have been hurt by Hanover."

Hunt said the association also believed Muir had too many other commitments after taking on the role of chief executive of Tru-test and being involved with both tourism and rugby organisations.

But Carmel Fisher, principal of Fisher Funds, which is a large Pumpkin Patch investor, said she supported Muir's re-election.

"We are voting in support. I have talked to the executive about his role [at Hanover] and continuing to be a director and it is obvious that fellow-directors and the management team really support him."

Having a board who trusted and supported one another made decisions much easier, she said.

Fisher did not believe Muir's association with Hanover made him a bad director. "It would be very easy to point the finger at Greg and make him the scapegoat but it hasn't been proven that he has done anything wrong."

Pumpkin Patch managing director Maurice Prendergast, who is a shareholder and a board director, said Muir had the full support of the board in standing for re-election.

"He has been a valuable contributor. While we understand the difficulties with Hanover from a publicity perspective, I don't think that affects his ability to be a good director," he said.

"We have such a small pool of directors in New Zealand it's vital we get someone that fits our needs. Greg is a retailer, which makes him critical to the role."

Prendergast said he did not believe Muir's role at Hanover had affected Pumpkin Patch.

"I have known Greg for a long time and one thing I have never doubted is Greg's honesty and ability. I think the public's perception has been tainted by the media attention.

"He has been a bit of a scapegoat for other people which should have had their hands up.'

Prendergast said being chairman was a difficult role when a company went through hard times.

Muir was overseas and did not return calls from the Business Herald.