Shareholders call for heads to roll at DX

The largest shareholder in DX Group, Gatemore Capital Management, has called for two of the Group’s board to step down.

Gatemore holds 11.3% of DX’s common stock. It requested that the Group convene an EGM that proposes the Chairman Bob Holt and non-executive director Paul Murray are replaced by four independent board members.

Gatemore has observed the share value of DX Group has dropped by more than 90% after profit warnings in November 2015 and February 2017. The shareholders said that despite DX implementing an integration plan, its performance has not improved.

Gatemore laid the blame at the doors of the board, saying that board members have not found any successful alternatives and that there is “consensus amongst DX’s largest shareholders that board-level change is required.”

In response, the board of DX said that it is disappointed by the decision by Gatemore. It said in a statement: “The Company believes it has an open and constructive dialogue with its shareholders and, at this stage, outside of Gatemore’s proposal to replace DX’s two existing Non-executive Directors, the Board is unclear as to Gatemore’s intended objectives in requisitioning a meeting.

“As announced in early February, the Board has commenced a wide-ranging review of the Company’s operations with a view to driving revenues and improving its financial performance. The Board is pleased with the progress being made in this regard and with its wider initiatives. In addition, it has strengthened the Company’s Senior Management Team with a number of new appointments, including Nick Cullen as Chief Operating Officer. Ian Gray, a highly experienced business transformation specialist, has also been acting as a consultant to the Board since mid-January.

“The Company will be reporting on the half year ended 31 December 2016 on 31 March 2017 when a further update on its progress will be given. In the intervening period, the Board will continue to pursue current initiatives to the benefit of shareholders and views Gatemore’s requisition notice as disruptive to management efforts and focus.

“As previously confirmed, the Board of Directors currently intends, in accordance with section 304 of the Act, to call such a general meeting within 21 days of the receipt of the Requisition and to provide for such a meeting to be held on a date not more than 28 days after the date of the notice of such meeting.”

Nonetheless, Gatemore said that it has worked with other large shareholders to find and vet four new candidates. These are: Ronald Series as chairman, Lloyd Dunn as non-executive director (effective 1 July 2017), Paul Goodson as non-executive director and Russell Black as non-executive director.

Liad Meidar, managing partner & chief investment officer at Gatemore, said: “As the largest shareholder in DX Group, we continue to see tremendous unrealised value in the business. DX is a trusted brand with leading a position in document exchange, secure delivery, and IDW freight, despite a precipitous decline in share value following a series of profit warnings. We are as eager as anyone to see DX succeed and we are confident that there is consensus amongst shareholders about the need for change.”  
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