Response to letter from Western Selection

RNS Number : 5735E

Swallowfield PLC

08 April 2011

 



Swallowfield plc

Response to Letter sent to Shareholders by Western Selection

The Board notes the circular sent to shareholders from Western Selection plc dated 4 April 2011. The Board confirms that it has received a proposal from Mr Gyllenhammar for the appointment of Mr Stephen Boyd as a director of the company but that, contrary to the inference in the circular from Western Selection, this does not take the form of a valid resolution. Accordingly shareholders will not be asked to vote on this matter at the forthcoming General Meeting.

Furthermore in light of the statements contained in the circular, the Board wishes to clarify that Mr Boyd is Chairman of Pittards plc, a company in which Mr Gyllenhammar has a 49.9% stake.

The Board stated in its recent circular to shareholders that it has, on several occasions, attempted to find a compromise with Mr Gyllenhammar in order to satisfy his concerns. Its latest offer, made in writing earlier this week, was similar in substance to offers made before Mr Gyllenhammar tabled his requisition for the removal of Shena Winning. This offer was made in order to avoid the need for a General Meeting, to maintain the stability of the company and to eliminate the current high levels of disruption being experienced by the management team. In view of the content of the circular from Western Selection, the Board considers that it is important shareholders are made aware of the terms of this offer in order to be able to reach an informed decision.

In summary, the latest compromise offer was as follows:

1.    That Shena Winning and Richard Organ would stand down within a short period of time sufficient only to undertake a sensible hand-over.

2.    That Peter Gyllenhammar and Western Selection jointly appoint a candidate of their choice as a Non Executive Director, with an understanding that this would be a free choice with the likely candidate being Stephen Boyd.

3.    That the other shareholders would appoint a further independent Non Executive Director of their choice with an understanding that Shena Winning would not be a candidate in this process.

4.    That the Board of directors would appoint a new chairman having appropriately consulted with all parties. This could be one of the Directors existing after the appointments in 2 and 3 above.

5.    An undertaking that all parties would accept the structure put in place for a period of time sufficient to establish a stable working structure.

However, the Board has been informed by Mr Gyllenhammar that he is unable to accept that other shareholders should be permitted to appoint a Director without the involvement of himself and Western Selection in the selection process. This is despite insisting on his right to appoint a director in accordance with step 2. Furthermore he has expressed the view that other shareholders appointing a director without such involvement of himself and Western Selection would be divisive and continue the split between shareholders without apparently recognising the inconsistency of his own position.

The Board is mindful of its responsibilities to all shareholders and therefore, whilst recognising the importance of seeking to maintain a positive dialogue with major shareholders, it believes handing a veto over Board appointments of the kind sought by Mr Gyllenhammar and Western Selection is inappropriate behaviour for a company listed on a UK public market. The Board is sceptical of the reasoning cited and surprised by the uncompromising position taken by both Mr Gyllenhammar and Western Selection. This gives the Board cause for concern and further underlines its request for shareholders to vote against the resolutions proposed by Mr Gyllenhammar and supported by Western Selection.

Lastly the Board note the statement in the circular from Western Selection that Ms Winning, as Chairman, has badly failed in managing investor relations and that she has benefited from the patience of shareholders. In rejecting this proposition the Board consider it relevant to note that on Ms Winning's appointment as Chairman on 1 March 2006 Swallowfield's share price stood at 50 pence. By contrast at close of business on 4 April 2011 (the date of Western Selection's circular) the share price was 130 pence, representing an increase of 160%. In a challenging economic climate the Board considers this (coupled with the dividends paid during the period) represents a satisfactory return to shareholders during the period in which Ms Winning has been Chairman. Whilst respecting Western Selection's entitlement to express its views to shareholders, the Board is nevertheless disappointed that Western Selection considers it necessary to threaten this performance through its actions, which are diverting the attention of the Board into a time consuming, costly and unhelpful distraction.

The General Meeting called by Mr Gyllenhammar, and supported by Western Selection, is the culmination of more than three years of attempts by them to exercise undue influence over the affairs of the company which started with their attempt to force two directors onto the Board at the AGM of 2007. The Board seeks your continuing support to resist this latest move given that the Board has made all reasonable efforts to find an accommodation.

For further information please contact:
Swallowfield plc
Ian Mackinnon	Chief Executive Officer		01823 662 241
Mark Warren	Group Finance Director		01823 662 241
Barrie Newton	Smith & Williamson Corporate Finance (Broking)		0117 376 2213
Nick Reeve, Martyn Fraser	Smith & Williamson Corporate Finance (Nomad)		0117 376 2213
Alan Bulmer	Performance Communications		0117 907 6514
Chris Lawrance	JBP Public Relations		0117 907 3400

Notes to Editors:

Swallowfield plc is a market leader in the development, formulation and supply of cosmetics, toiletries and related household products to the own label and branded sectors.  We pride ourselves on being a customer orientated, innovative, flexible and responsive company and combine high quality, competitive products with strong customer service - developing close partnerships with our customers and an in depth knowledge of their requirements.

 

END

 

 

RSPGMGGDLRVGMZG