Gatemore calls for DX Chairman and Non-Executive Director to step down

Gatemore Capital Management – the largest single shareholder in the DX Group – has requested DX to convene an EGM and has called on the Chairman, Bob Holt, and the Non-Executive Director, Paul Murray, to step down. Gatemore, which holds 11.3% of DX’s common stock, is proposing that Holt and Murray be replaced by “four new truly independent board members”.

In a statement sent to Post&Parcel today (21 March), Gatemore outlined its reasons for the proposal: “Share value of DX declined 90% after profit warnings were issued in November 2015 and in February 2017. Despite DX implementing an integration plan (“OneDX”), the company’s performance has not improved. The current board has failed to find strategic alternatives and there is consensus amongst DX’s largest shareholders that board-level change is required.”

Gatemore also said that it has worked with other large shareholders of DX to “identify and vet four industry-leading candidates”.

According to Gatemore: “These nominees, collectively, would constitute one of the best and most well-rounded boards in the UK delivery sector. The candidates have extensive experience in transport, business turn-around and deal-making, and will be better at exploring strategic alternatives which will set DX on a new trajectory and open new opportunities. Importantly, these nominees are entirely independent of Gatemore and, to the best of Gatemore’s knowledge, other major shareholders of DX.”

The candidates proposed by Gatemore are:

• Ronald Series as Chairman. Series has over 25 years of experience in executive and non-executive roles within transport, logistics, and shipping. He has previously been Chairman of Tuffnells Parcels Express, and was recently Chief Restructuring Adviser at Lonmin Plc.
• Lloyd Dunn as Non-Executive Director. He has been in transport for almost 40 years. In 1985, he joined Russell Black as a founding member of Nightfreight. In 2002, he joined Tuffnells and became Managing Director in 2003 and CEO in 2005.
• Paul Goodson as Non-Executive Director. Goodson was Executive Chairman of Great Bear Distribution and he spent 13 years with Barclay Private Equity, during which time he was involved in the purchase and sale of Nightfreight.
• Russell Black as Non-Executive Director. Black has over 40 years of experience in the transport industry, and was founder and CEO of Nightfreight from 1984 to 2002.

Liad Meidar, Managing Partner & Chief Investment Officer at Gatemore, commented: “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.”

The DX Group has issued a response, saying that the Board is “disappointed” by the decision taken by Gatemore to requisition a general meeting of the Company.

The DX statement continued: “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.

“Shareholders are advised to take no action at this time. Further announcements will be made in due course.”

UPDATE

Speaking to Post&Parcel this afternoon, Gatemore’s Liad Meidar, said after taking soundings from other DX shareholders “there was a clear consensus that we need change” as the existing team “does not have the right people”.

Meidar declined to go into specific detail about the sort of changes that the proposed new board would implement as he felt that this would be to “put the cart before the horse”.