Infant milk group Bubs Australia’s chairman Alan van Noort has walked out of the business just 10 days after its listing and on the heels of the sale of two-thirds of his shares.
The unusual developments come as rival Bellamy’s battles with a crisis of confidence following a disastrous double guidance cut over the past six weeks.
Bubs Australia (BUB) completed a backdoor listing on the ASX on January 3, successfully raising $5.15 million at 10c a share despite a dark cloud hanging over the sector.
The company had been spun out of Hillcrest Litigation Services, with the business turning from litigation funder to infant milk group on a dime thanks to the purchase Bubs owner Infant Food Holding Company.
No mention was made in Bubs’ prospectus of Mr van Noort’s imminent departure and it had effectively said he would remain as chairman after 18 years with its predecessor company.
Today Bubs said his aim had always been to facilitate the transaction to establish Bubs and once that had happened his job was done.
Bubs shares quickly surged as high as 45c on January 6 before tumbling back to 20.5c by the close of trade yesterday.
At 10.05am (AEDT) today, Bubs shares were steady at 20.5c, valuing the company at $48.9 million.
While investors have endured a rollercoaster ride, some of the company’s biggest shareholders — including Mr van Noort — have been taking a leave of absence.
Most prominent among them is the Ashok Jacob-led Ellerston Capital, which slashed its stake from 13.7 per cent to just 5.32 per cent from January 6 to January 11.
Ellerston manages the investment on behalf of third parties, with the sell-off securing around $6 million.
Mr Jacob may also have played a hand in another substantial shareholder reducing its stake, with WF Investment Holdings — believed to be tied to Albert Tse’s private equity fund Wattle Hill — securing $2m through share sales over the past week.
In doing so, WF Investment has trimmed its holding from 8.33 to 5.78 per cent.
Mr Jacob is a noted adviser to the Wattle Hill fund, alongside former NSW premier Nick Greiner, Kerry Stokes’ adviser Warwick Smith and AFL commissioner Gabrielle Trainor.
Mr Stokes himself has some skin in the game, with the Seven Group-linked Wroxby holding 0.63 per cent upon listing. It is unclear if that stake has been maintained in the interim.
Intriguingly, Mr van Noort also laid a trail for the exit before his shock departure today, selling 3.24 million shares on January 5, cashing in on the rally seen immediately after the company hit ASX boards.
The sell-off represented around two-thirds of his stock and delivered him a return of $1.05m.
His decision to step down today came without warning after he was the only former board member of Hillcrest to remain a director after the Bubs IPO.
“I very much enjoyed being involved in this transaction between Hillcrest and The Infant Food Holding Co to establish Bubs Australia Limited and wish to thank all concerned,” Mr van Noort said today.
His place as chairman will be jointly filled by the remaining board members until a replacement is found. The recruitment process will begin once an internal analysis of the expertise and experience on the board is carried out.
Managing director Kristy Carr indicated Mr van Noort’s decision was linked to the success of the Bubs buy, although offered no suggestion the move was expected.
“Alan’s objective over the past six months has been to identify and facilitate a transaction that would secure the future of the company and manage the execution of that transaction,” she said.
“Alan achieved that objective and after 18 years on the board of Hillcrest Litigation Services (and its recent successor Bubs Australia), he has decided it is time he retired.”
The prospectus laid out ahead of the backdoor listing reveals Mr van Noort held a services agreement with the company that entitled him to a base salary of $200,000 plus superannuation, with one month’s notice required for the termination of the agreement.
By Daniel Palmer and John Durie
Source: The Australian
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