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Hibu: backing the rebels on principle if not with my head – More reasons to despise City lawyers

Tom Winnifrith
Monday 28 October 2013

Private investors owning more than 5% of the equity of Hibu (HIBU) have ganged together to force an EGM to oust the board and replace it with their own candidates. My head says this is folly but my heart is with them on principle, given the actions of uber-expensive City lawyers Herbert Smith.

Hibu is undertaking a debt for equity restructuring which will see private investors more or less wiped out – I warned punters this would happen more than a year ago and got stacks of BB abuse at the time as you can see HERE

As far as I can see the company has breached its banking covenants and thus the banks now call the shots. I see no other way out. However the rebels in the Hibu shareholders action group (www.hibu-shareholders-group.com ) think otherwise.

They suggest that the proposed restructuring (which will see virtually all of senior management keep their jobs) is NOT the best way out for equity holders and have thus tabled an EGM calling for new directors to pursue a new strategy. But they are also asking questions of existing directors specifically asking the chairman who is both an equity and a debt holder to explain how he has avoided any conflict of interest during the restructuring discussions? That is a fair enough question.

Were I at the EGM I would also asked the board to comment on a rumour that it turned down a $1.9 billion bid for its US assets last year which would have eradicated sufficient debt to preserve equity value. Is this rumour true and if so what on earth was the board thinking of in rejecting it? There are other questions the rebels will propose and I gather that they have asked the FCA to look into a number of matters. No doubt there is nothing awry here. There never is.

Notwithstanding all of this, my head tells me that at this stage while forcing answers from the board might give emotional satisfaction, the shares are fundamentally worthless and thus the rebels are wasting their time.

But my heart is with them if only because of the actions of uber expensive City lawyers Herbert Smith

on Shareprophets | Comments
About Tom Winnifrith
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Tom Winnifrith is the editor of TomWinnifrith.com. When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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