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Iofina blasts Arron Banks and questions wisdom of focusing on iodine as coronavirus disinfectant

Brexit campaign financier signalled his intention last week to seek a place on the Iofina board

Iofina PLC -

The board of Iofina PLC (LON:IOF) has unanimously recommended that shareholders resist attempts by Brexit-backer Arron Banks to join the board.

The iodine producer revealed earlier today that it had received a request to convene a meeting from Rene Nominees (IOM) Limited A/C POOLED so that shareholders could vote on whether to remove non-executive chairman Lance Baller from the board and appoint Arron Banks, co-founder of the Brexit campaign group Leave.EU, as a director.

Banks, who controls around 10.56% of Iofina’s voting rights, is unhappy over the company’s move into hemp and wants it to make more of its iodine capability during the coronavirus crisis.

Iofina has until 30 March to call the general meeting and the board expressed surprise at the request, given that Banks is a long-time supporter of the company.

The directors feel that Banks’s nose might have been put out of joint by the board’s decision not to proceed with a hemp project in Belize that Banks was associated with.

The board is categorically opposed to the proposed resolutions and believes they are not made in the best interests of the wider shareholders but are in fact self-serving to Banks and his business associates.

Iofina noted that the company is on track to deliver further record production and earnings growth in 2020 and the board is making progress in restructuring the company’s debt.

When Banks first indicated (via a now deleted tweet on Twitter by his associate, Andrew Wigmore) his intention to seek a place on the board, he made a number of accusations and complaints, all of which Iofina rebutted in its stock market statement today.

Iofina admitted some of Banks’s complaints had some validity in a historical context but it believes Banks’s criticism should be directed at the previous Iofina regime, not the current board.

The accusation that the company had blown millions on “almost valueless” gas fields as part of an initiative to supply water to fracking companies demonstrated that Banks “does not understand the company and its history”, Iofina claimed.

It was never the intention to generate the fresh water supply from the Montana iodine/natural gas field and a minimal amount of money was spent on the fresh water project before it was abandoned after the company was unable to get a necessary permit from the state of Montana.

The unrelated Atlantis Field for natural gas and iodine was, at the company's inception, an economic gas field but then natural gas prices collapsed as a result of the fracking boom.

When Baller was chief executive of Iofina (2010-13) he made the strategic decision to explore for iodine fields and develop the company’s IOsorb technology and plants. This switch saved the company, Iofina asserted.

READ Iofina unveils investment in hemp production firm Organic Vines

Banks has taken a shot at Iofina’s investment in Organic Vines, a company in which Baller holds all the voting rights, to finance the growth of hemp seeds.

Iofina responded by saying that while the deal was a related party transaction it was constructed in a way that would protect Iofina shareholders, and Baller was excluded from board discussions and votes on whether to invest in Organic Vines.

The company anticipates a profit on its investment in Organic Vines in 2020 of up to US$1.8mln.

“Baller's involvement was not a consideration when making that investment decision,” Iofina’s statement said.

“The board suspects that this is the real reason behind the requisition request. Messrs Banks and Wigmore were seeking to use Iofina as a vehicle to conduct related party transactions solely for their own benefit. That the board denied them that opportunity, for good reason, has clearly met with their disapproval,” Iofina said, in reference to the hemp project in Belize with which Banks was associated.

Banks’s threats to call for a meeting to overhaul the board started soon after Iofina rejected the idea of establishing an IofinaEX presence in Belize.

Lastly, the board compared Banks’s experience, largely derived from working in the insurance sector, with that of Baller, who “has guided Iofina through its most difficult period to occupy the strong position it holds now”.

“As such, Iofina does not view his appointment as beneficial to the company, but more likely would negatively impact the strategy and undo the significant progress that has been made over recent years,” Iofina said.

The company questioned the business logic of Banks’s suggestion that the company should focus on iodine disinfectants for use against the coronavirus, saying that Iofina, a business-to-business iodine and iodine derivative seller without iodine-based US Environmental Protection Agency disinfectant registrations, should not be focused in this area when there are chlorine, peroxide and alcohol-based disinfectant solutions available.

Shares in Iofina were down 4.2% at 18.3p.

Quick facts: Iofina PLC

Price: 12.25 GBX

LSE:IOF
Market: LSE
Market Cap: £23.5 m
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