Activist investor buys up more SCA shares
Sandon Capital, the activist investment group looking to spill SCA’s board of directors, has bought up another $2.7 million in company shares, pushing its ownership past the 10% mark.
This marks the second time in under a month Sandon Capital has bought up SCA shares. Last month, it increased in holdings from 6.1% to 8.1%.
In May, Sandon stated its intention to move resolutions at the company’s general meeting to remove the entire board of directors. It also stirred trouble with an application to allow ARN to use all of its voting power (some of ARN’s holding is barred from voting rights because of a legal ruling).
SCA responded with an ASX filing, noting that shareholders representing more than 50% of voting capital are supportive of the current board and management and intend to vote against such resolutions. These supporters include Thorney Investment Group, who hold 15%; and Spheria Asset Management and Ubique, who hold 10% apiece.
John Kelly, SCA’s CEO.
SCA dismissed the proposed resolution as “a considerable distraction and unnecessary cost to SCA” in its May filing, “given the limited prospects of success.” It “strongly encourage[d]” Sandon to withdraw its proposed resolution.
Sandon first bought into SCA in October 2024, at 51c per share. The shares currently trade at 55c.
“Given the current operating performance and the momentum of the business, the SCA board and its major shareholders are of the view that it would not be in the best interests of all Shareholders to support the proposed resolutions,” SCA wrote in late May.
Gabriel Radzyminski, director at Sandon, said in a letter to SCA chairman Heith Mackay-Cruise, it was “stunned” the board decided to resume payments of dividends, instead of paying down debt.
“We consider the decision to resume dividends to be a purely defensive move by the Board; read in the context of our discussions regarding the need for changes at Board level,” the letter reads.
“This decision appears to be an attempt by the Board to placate shareholders. We are confident most shareholders will see this decision for what we consider it to be – an ill-advised and short-sighted attempt at self preservation.”
It also slammed an incentive scheme for being “unattainable” and “problematic”, and cautions that a high share price target “eventually lead to disillusionment for all stakeholders” and “encourages ‘roulette’ style strategies, where poor decisions might be made to gamble a company’s future just to reach those otherwise ‘unattainable’ targets.”
Mumbrella has reached out to SCA for comment.
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