Expect a tempestuous showdown about six weeks from now when a good number of miffed shareholders are expected to engage robustly — albeit virtually — with the management of the Rupert family-controlled Reinet.
The Luxembourg-based investment vehicle has not exactly covered itself in glory since selling its two biggest investments and then failing to spell out convincingly how the oversized cash heap will be mobilised. The latest tilt at a share buyback has not improved sentiment noticeably, with Reinet still trading close to 12-month lows.
But some credit is due to Reinet for not hiding behind a curtain of corporate clauses. Its articles of association do not permit full virtual participation at AGMs, but a live feed of proceedings will be available for the mid-August meeting via an online platform. Shareholders can submit questions online.
This might be the best news Reinet shareholders have got since the financial results were released
Reinet, encouragingly, will also convene an extraordinary general meeting to consider changing the articles of association to allow more flexibility for virtual participation at future shareholders’ meetings. This might be the best news Reinet shareholders have got since the financial results were released at the end of May.
But there will be an uneasy impasse in the interim. Serious questions remain about the relevance of Reinet, with activists increasingly pointing to the fact that the Rupert family, through its asset management company, earned fees that dwarf the collective dividends paid to shareholders. The long-term performance of Reinet has also been disappointingly pedestrian.
Convincing shareholders that there is an enduring strategic imperative will be a tough task for Reinet executives. At this point, the calls to “pay back the money” or initiate a buyout of shareholders to take Reinet private sound increasingly compelling.
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