Tariq Hamoodi and Decagon Asset Management, a London hedge fund, who collectively own a 5.02% share in Nanoco Group PLC (LSE: NANO), have demanded a shareholders’ meeting with the intention of ousting the chairman, CEO, CFO, and CTO.
They propose to replace these executives with a new team, including Hamoodi, an ex-analyst at Morgan Stanley (NYSE: MS) and current private investor and adviser at the Goldenbridge family office. Other proposed directors include Dooyong Lee, the founder and CEO of Aequitas Technologies, a patent licensing specialist; Greg Moeller, a QD Vision co-founder that spearheaded the development of QLED for flat panel TVs and was later bought by Samsung; and Ben Barnett, Obotritia Capital’s CIO, who previously managed money at Fortress and Soros Fund Management.
In March and May, Hamoodi, known for his penchant for confrontation as evident from charity boxing bouts on YouTube, had sent two letters voicing concerns over corporate governance issues to the Nanoco board. This week, he sent a third letter requesting a general meeting (GM).
A microsite, transformingnanoco.com, has been established by the shareholders and their advisers, providing access to one of the letters, information about “Nanoco’s network of related parties”, profiles of the proposed directors, videos of meetings between Hamoodi and Nanoco directors, and a presentation on “a path to restoring shareholder confidence”.
The recent letter has not been disclosed to shareholders yet, but it is believed that Hamoodi and Decagon see great potential in the company, hindered by problematic corporate governance issues.
Their primary concerns seem to be the board’s lack of independence and its failure to deliver for all but a few shareholders, especially asset manager Lombard Odier and financier Richard Griffiths.
The March letter accused the company of giving misleading information about the prospects of the Samsung lawsuit, which was settled for US$150 million. It claimed that preferred shareholders acted on undisclosed information and sold their shares in Nanoco while the share price was rising due to withheld or misrepresented information about the Samsung lawsuit before it dramatically dropped after the publication of the settlement details.
It was also pointed out in the letter that the company hasn’t made a profit in over two decades, with the share price plunging over 50% since Brian Tenner assumed the CEO position, while his pay increased by more than 50%.
Hamoodi and Decagon suggest appointing new executive and independent directors identified through an unbiased search process. These individuals bring a wealth of experience in quantum dots product development and marketing, intellectual property licensing and litigation, product development, and capital markets.
In response, Nanoco stated that no directors plan to step down. Non-executive chairman Christopher Richards said in the statement: “We continue to emphatically reject Mr Hamoodi’s proposals to change the entirety of the board at such a critical time in Nanoco’s evolution.” He criticized Hamoodi’s “selective interpretation of the past, significant factual errors, and speculative concerns” as taking events out of context and creating a misleading narrative.
Richards assured that Nanoco is at a crucial juncture with promising growth opportunities and the possibility of a substantial return of capital to shareholders. He warned that the proposed board changes could negatively affect Nanoco’s future prospects and possibly lead to a talent exodus from the company.
