RE: Why did Kelso do it?4 Jun 2024 15:35
Crafty its interesting that the FT have picked up on this from a Corporate Governance perspective and in the recent the and consequential tit for tat and just to dwell on this sentence which is being brandished about and which you pick up on.
"Their fiduciary duty is to act in the best interests of all shareholders."
Kelso's intention on purchasing their shares in THG as activist investors was to bring out the hidden value in the company. Thats with a full stop. They have then gone a long way to publicise the logic by RNS, comment and on Linkedin and imo tempting in a bid from Apollo, abruptly ended by THG. Their interest there is clearly to see the share price higher and that being in everyones interests. So motivation wise they are beyond reproach. They have then encountered not only a still languishing share price and with as they point out nothing done on strategy update, seperate listing, premium listing and have tried to address that legitimately through firstly an open letter and secondly with an intention to vote against the Chairman.
You then have to look at the motivation for THG holding Kelso shares. It came after Kelso had sent the letter expressing concerns re strategy and asking for a shareholder vote. Moulding then bought an initial stake - but said nothing about the letter. Later if I remember correctly there was a fleeting remark in a linkedin post re Pacman defence. So the FT maybe a little remiss as I think the Times published a story on the Pacman defence at the time. So here you have the CEO of THG using his own money, not THG company money to accumulate shares in a company that is challenging the present status quo. That same individual is the Landlord for most of THG's estate, receives rent from them in consequence - and is also a substantial shareholder. So is this an attempt to stifle what Kelso are trying to achieve - which is a substantial rise in the share price.
One is clearly acting for a purpose which it can be seen would be in the interests of all shareholders, whilst the other seems to be acting in a private capacity and its hard to see at this time why Mouldings holding in Kelso, given timing and past remark, would be seen to be in the best interest of all other Kelso shareholders.
Now just to throw up some numbers and dynamics in here. Kelso have 0.6%, Oliver Cookson has about 1.4% , 1.5% and has publicly expressed his support in voting with Kelso. But then don't forget that you have to add in that OVMH of the Netherlands to the equation who have vastly deep pockets, deeper than Moudling, and who not only also criticised THG about lack of strategy but also bought 3% of Kelso. So added altogether that makes 5%. That number is the exact level of support you need under the Companies Act to table resolutions, if I remember correctly
The interesting part is whether OVMH will come back into the market to buy more Kelso shares in further support of Kelso's aims. 1.91M Kelso shares traded so far today.
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