Dowgate Capital Share Discussion Threads

[gengulphus] 16/7/2009 17:09

Is there anything to stop them squandering/helping themselves to more money?

I haven't double-checked in this particular instance, but the terms & conditions of takeover bids routinely include contain provisions that if the company distributes money in any manner outside the normal course of business, the takeover is off. If they didn't, the duty of directors to look after their shareholders' interests would generally require them to respond to a takeover bid once the bidder had committed to it by distributing as much of the company's assets as possible to shareholders, allowing the shareholders to get the assets and the takeover price...

So at least while the current takeover bid is still in progress, no, the directors almost certainly cannot help themselves in any significant way to the company's money without causing Astaire to withdraw from the takeover, which would probably reduce the value of the directors' own shareholding and render them liable to be sued by shareholders for taking actions as directors of the company that were blatantly against their shareholders' interests.

More generally, excessive helping themselves to the company's money could in principle lead to directors being sued for the same reason whether there is a takeover bid going or not. But in the context of a company that is expected to remain in the shareholders' hands indefinitely, whether any particular level of director remuneration is in the shareholders' interests is always going to be a judgement call... Doing it while a takeover bid is happening would be much riskier for the directors because the consequences are much shorter-term and more obvious.

Gengulphus

[davidosh] 16/7/2009 17:09

I accept your views and concerns. I will be at the AGM to ask many questions but I suspect it was not TR who got all that pension benefit. Have you asked the remaining directors to list the entitlements to you ?

[lr4850] 16/7/2009 16:43

Cheers Gengulphus

Sorry for spelling your handle wrong previously. I have name and reference number- so far so good, but would like help putting a coherent and cogent case together to provide them with better information than i initially did. If we all do something perhaps we can stop Rawlinson walking away with a big chunk of money which he should not receive all things being equal and proper. Is there anything to stop them squandering/helping themselves to more money?

Perhaps Raw may see sense and hand back his last pension award?

[gengulphus] 16/7/2009 16:34

The FSA might find concerns here - or they might not. If you want to make reasonably certain they take something into account, send it directly to them - and if they've given you some sort of reference, case number, etc, quote it to them to make as certain as possible it goes to the right person within the FSA... (Organisations' right hands often don't know what their left hands are doing!)

Gengulphus

[lr4850] 16/7/2009 15:39

FSA are going to look into my complaint about actions of DGT board; especially regarding pension and renumeration. Can anyone here help in stating what they see as the issues of concern? Perhaps for the FSA to read here in the course of their enquiries.?

[mentoruk] 16/7/2009 09:32

I recall that the Offer can be extended to the 23rd August - at least it brings the AGM into play which could be uncomfortable for the remaining plc directors. I wonder if Astaire will be there to vote their shares against them.

[gengulphus] 16/7/2009 08:57

Interesting - Astaire have got acceptances that take them up to 73.81% of the shares, but have not lowered their acceptance condition (which they reserved the right to do in the offer) and so have not declared the offer unconditional. A common tactic in these circumstances is to lower the acceptance condition to say 70%, declare the offer unconditional, and so (a) actually acquire the shares that they have had acceptances for and so be able to vote them; (b) prompt acceptances from those who wait and see while an offer remains conditional, but accept when it becomes unconditional. That's a fairly common tactic among small shareholders, I believe, and I'm also fairly certain I've seen nominee broker terms & conditions that basically say it's their default action unless the investor instructs them otherwise.

They've also extended the offer until July 22nd. I think they're pretty certain to go over 75% then and be able to start pushing things through by declaring the offer unconditional and starting the delisting process - but I'm a bit surprised they're not already pushing things through!



Gengulphus

[mentoruk] 10/7/2009 17:58

I have witheld 5 shares (rounding down to the nearest 10 shares) from my acceptance of the Alternative Offer to ensure my ability to attend the AGM. If the Offer goes unconditional at 90% acceptances, these outstanding shares will then be compulsory purchased by Astaire under the minority provisions.

[gengulphus] 10/7/2009 14:20

As entitlements to new Astire shares will be rounded down to the nearest whole share, and the offers are for multiples of 10 DGT shares, why not accept the offer for one's holding rounded down to the nearest 10. The excess shares, which would have been forfeited anyway, can be used to gain access to the AGM.

In my experience, such calculations are always done fully proportionately, with rounding down only happening at the end - e.g. if you accept the Basic Offer on a holding of 10,007 shares, you get 10,007/10 * 30p = £300.21 plus 10,007/10 * 9 = 9,006.3, rounded down to 9,006 Astaire shares. And the offer document ( ) does say "and so in proportion for any number of Dowgate Shares held" immediately after the basic terms of the offers (on page 10 of the PDF) - which means that they will be doing it that way.

Holding back a share or two to ensure you're entitled to go to the meeting does make reasonable sense - it only costs a few pence - but it isn't entirely cost-free. That said, I won't be doing it - mainly because I've already given instructions to accept to my broker.

Gengulphus

[rj allen] 10/7/2009 12:25

As entitlements to new Astire shares will be rounded down to the nearest whole share, and the offers are for multiples of 10 DGT shares, why not accept the offer for one's holding rounded down to the nearest 10. The excess shares, which would have been forfeited anyway, can be used to gain access to the AGM.

[gengulphus] 10/7/2009 09:30

I see your point - but if the offer has gone unconditional and I'm no longer a shareholder in Dowgate and am one in Astaire (at least temporarily), it's the Astaire AGM that is the opportunity to find out about the investment going forwards...

I think my big lessons from this investment are about the dangers of investing in a company that:

* Depends on a few key directors or employees. I received the company circular yesterday giving their reasons for recommending the offer, and a very important one seems to me to be the fact that they had just four key people: Tony Rawlinson, James Caithie and Liam Murray in DCA and Clive Mattock in DCS. The fact that all four have indicated eagerness or willingness to leave must be very important - they don't actually say that the company would be crippled afterwards, but that's certainly the impression I get!

* Gives its directors the authority to issue numbers of new shares that are large percentages of its existing share capital. It gives them the opportunity to squander those shares, and they are altogether too likely to take that opportunity - as demonstrated by the Dru Edmonstone affair...

Both points will be on my checklist for companies in the future!

Gengulphus

[gengulphus] 09/7/2009 15:58

An AGM has to have rules for obvious reasons but ethically and morally a shareholder until very recently should be able to attend.....certainly not vote. If I want to attend any AGM I go.....I even attend before I invest and check out management and ask awkward questions. If directors do not wish to have me there as a guest then I do not wish to invest at all ...full stop. What are they trying to hide ??

In that situation, there is quite a bit of potential value for you and for the directors in you attending - you because you learn something about a company you're considering investing in; the directors because they're dealing with a potential investor in the company.

If the offer has gone unconditional, neither of those bits of value exist. The only value remaining for me is the opportunity to ask awkward questions, the answers to which are not going to affect my future investment, and the directors can very easily deny me that opportunity and have no incentive not to do so.

I simply don't rate that opportunity highly enough for it to be worth the travel time and cost... I do if there is still a reasonable chance that it might affect future decisions of mine about the investment and I'm still a shareholder and cannot legitimately be excluded from the meeting, but that ceases to be the case when the offer goes unconditional.

Gengulphus

[davidosh] 08/7/2009 21:29

lr4850.....Who are you thinking had the £395k ?

[lr4850] 08/7/2009 18:46

£15000 pension for 3 years; then this year, probably being aware of takeover £395,000 - in their worst performing year.

[davidosh] 08/7/2009 18:42

The AGM has to happen...that is company law. What do you see as the highly dodgy award of company funds ? Can we all agree on what needs investigation if there is something ?

[lr4850] 08/7/2009 18:15

I think your energies would be best directed towards contacting the FSA. Perhaps there then being some prospect of recouping some funds that Rawlinson has awarded himself in some highly dodgey circumstances. IMHO the AGM isn't going to happen.

[davidosh] 08/7/2009 18:10

I suspect the AGM has been delayed exactly for that reason and by normal listing rules it has to be held within 15 months of the last one which was 3rd July just passed. Nomads who needs em ! ??

[mentoruk] 08/7/2009 17:04

DavidDosh

This AGM is much later in the year than last year and it is no doubt fortuitous for the remaining Dowgate Directors that the Astaire Offer(s) may go unconditional before the AGM when one of them has to stand for re-election.

I intend to be there and if necessary, will hold back at least one share to be entitled to speak and vote. Other shareholders who propose to attend may wish to do the same.

[davidosh] 08/7/2009 16:45

mentoruk, Gengulphus

An AGM has to have rules for obvious reasons but ethically and morally a shareholder until very recently should be able to attend.....certainly not vote. If I want to attend any AGM I go.....I even attend before I invest and check out management and ask awkward questions. If directors do not wish to have me there as a guest then I do not wish to invest at all ...full stop. What are they trying to hide ??

If the directors stop you attending the AGM when you have proof of your previous holding and there is nothing that you can cause problems with re the vote then they have a nerve preventing you and deserve all they get in an investigation IMO.

[mentoruk] 08/7/2009 16:27

DavidDosh

I agree with your sentiments but you have to be a shareholder or to hold a proxy to be entitled to attend and speak at an AGM, unless invited by the company's directors (e.g. the press).

[gengulphus] 08/7/2009 16:27

I do not see why any shareholder who has held shares during the period in question cannot attend and ask questions at the AGM. You do not vote of course as the right to do so would have passed to the buyer. Directors need to be held to account and you have a right to know the answers. Let them try to stop you I guess.

I agree that it would be sensible for those who had been shareholders in the period but were no longer so to be entitled to attend and speak but not vote - but I'm pretty certain that it isn't in fact the case.

Gengulphus

[lr4850] 08/7/2009 16:27

Cheers mentoruk

I will let you all know if I hear anything. The more that write to FSA and AIM, the better, so come on everyone,,write.!

[mentoruk] 08/7/2009 16:23

Ranoszek

Given the parties to this transaction, I suspect that the Panel, the AIM team and the FSA are taking an interest in this Bulletin Board, especially given the aborted discussions last year with Daniel Stewart when the Dowgate share price was a lot higher and the subsequent proposed MBO deal of DCA led by the 'gang of 3', including Dowgate's (now former) Executive Chairman. I regard this as a very serious matter but probably not one for the SFO.

[gengulphus] 08/7/2009 16:20

The AGM is very important and answers to many questions are needed. TR having resigned will no doubt fail to make an appearance. Are any of you guys going or you simply throw money away without understanding how or why ?

If the offer has gone unconditional by then, I will no longer be a shareholder and so not entitled to go to the AGM - and I won't be going on the off chance that there will be anyone there worth questioning and I'll be permitted in to question them!

If the offer hasn't gone unconditional by then, I will be going, barring any unforeseen circumstances.

Gengulphus