Thursday, April 23, 2015

Board contest at Reef Casino

Reef Casino (RCT) posted AGM details today. This is normally boring stuff but interest this time is that the largest individual shareholder Gary Mauric, with about 5.3%, is contesting a board position. That means there will be three candidates for two positions with existing directors Keith DeLacy and Richard Haire nominated for re-election. Both are prominent pillars of the Queensland business boys club.
Mauric has no chance given that Casinos Austria and Accor with a combined holding of 70% control the board and the board have recommended a vote against his election:

Board recommendation
The board recognises that having a range of different skills, backgrounds and experience amongst its directors is important. The board considers that the directors standing for re-election demonstrate commitment to their role and continue to make a valuable contribution to the board. The board recognises that a range of tenures amongst the directors provides a valuable perspective on the Trust and its operations. In particular, the board values Mr DeLacy’s deep understanding of the Trust, its investments and the environment in which it operates because of his long tenure as a board member and because he is based locally in Cairns. The board recognizes Mr Haire’s extensive experience in listed public companies and his corporate governance experience including his tenure as President of the Queensland Division of the Australian Institute of Company Directors.
The board has considered Mr Mauric’s work experience and formed the view that he would be a suitable director were there three vacancies available on the board. However, in light of the limited vacancies on the board, only two of the three candidates can be appointed. Given the substantial contribution that Mr DeLacy and Mr Haire make to the board and their proven track record as directors, the directors of Reef Corporate Services Ltd (excluding Mr DeLacy and Mr Haire in respect of their own re-election resolution) recommend that unitholders vote in favour of the election of Mr DeLacy and Mr Haire and against the election of Mr Mauric.
The chairman of the meeting intends to vote undirected proxies in favour of the election of Mr DeLacy and Mr Haire and against the election of Mr Mauric.
The top twenty holders are listed in the annual report with Mauric holding 2,507,465 units in his own name. Spouse Rita is also listed with 150,000. Most recent trades in RCT have been up to $3.35 which is $1 below the Aquis bid. So Mauric would have been some $2.5 million better of had the bid been completed.
I have no idea what Mauric's motivation may be. Subject to further research KS Corporate Advisory anticipates recommending a vote for Mauric. My own holding of 1,000 RCT acquired via SMSF the week the bid collapsed will provide at least moral support. Perhaps I should lobby for proxies?
There remain questions arond the performance and management of the casino last year during the takeover bid, the probity delays by Fung and whether this breached the implementation agreement, as well as issues related to continuous disclosure by Fung.
Could be an interesting AGM at the casino on 25th May and there is also a 20% discount voucher at Tamarinds.
Reef Casino 3 year chart

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