Purplebricks Group PLC (AIM:PURP) shareholders will later this month vote on whether to oust the online estate agent’s chairman after activist investor Lecram said he and the company have lost the confidence of the market.
Lecram Holdings, which is the property investment vehicle of Adam Smith, who is a director of Alternative Income REIT and sits on the board of Glenstone REIT, built a 5.2% stake in the company this year as he called for board changes since July.
The requisitioned shareholder meeting will take place on 19 December, with a proposal to remove chairman Paul Pindar and appoint Harry Hill, the former chairman of Rightmove and Countrywide (LSE:CWD), as a director, with a view to him becoming chairman.
Purplebricks said in a statement that it considers both resolutions are "not in the best interests of the company and its shareholders as a whole", saying it believes its board is sufficiently strong and that the moves would be "disruptive and destabilising when the company and its executive leadership team are focussed on the delivery of the plan [to build a more scalable business model]".
Lecram's requisition letter from earlier this month said the performance of the company under Pindar “has been disastrous, particularly in terms of value for shareholders. This underperformance is a result of a series of poor business decisions”, noting the shares have fallen over 99% since their high in 2017, with a 66.6% decline over the past 12 months.
In another statement issued late yesterday, Lecram said the circular posted by Purplebricks was "notable for what it does not tell shareholders, to the point of being economical with the truth...[and creates] a misleading impression about our views".
The activist investor noted that it has been "encouraged by the plans of the new CEO and CFO to turn things around and stem the cash bleed," but "highlighted the concern about execution risk while the chairman that led Purplebricks into this dire situation is still at the helm".
In August's annual results, Purplebricks boss Helena Marston said the performance had been "not good enough" but that the company was "assessing additional revenue streams" including a new mortgage proposition, and expected to deliver “positive cash generation” by early 2024.
Lecram noted that Pindar's biography misses out that he was chairman of Eve Sleep, "where shareholder value was destroyed under his watch and which recently went into administration", while questioning the independence of Simon Downing, who is described as the senior independent director of Purplebricks, but the circular "conveniently does not point out that he is also a director of the Pindar family investment business, Literacy Capital".
Furthermore, the activist questioned the motive for Axel Springer in backing Pindar, as "has had board representation for a number of years and has, by its own admission, significantly written off its near £200m investment, is giving this undertaking".
Lecram criticised the company for giving no further detail on its turnaround plan, with "no evidence that Purplebricks’ market position is improving, no evidence that the cash bleed is being stemmed".
It said the falling share price, which has declined another 35% since the August full-year results, "implies the business is worth no more than the cash on its balance sheet, shows the market has lost confidence in the leadership of the company".
Lecram finished by saying: “It is clearly time for a change at the top at Purplebricks before it is too late. We strongly urge independent shareholders to vote in favour of both resolutions – to remove Paul Pindar and to appoint Harry Hill to the board, with the view to him becoming chairman.”