AB1201 Financial Management

News Critique Proposal

Proposed Article
Yacht-maker's CEO, chairman voted out Jonathan Kwok 527 words 13 October 2011 Straits Times STIMES English (c) 2011 Singapore Press Holdings Limited INVESTORS in money-losing luxury yacht-maker Grand Banks Yachts yesterday staged something of a coup by voting both the chief executive and the non-executive chairman off the company's board. It was a rare case of minority shareholders succeeding in voting off the founding members of a company. The investors also voted against a deal to invite a proposed white knight on board. But in a twist to the saga, the company said late last night that it was going to reappoint those voted off. What should have been a routine annual general meeting (AGM) ended with a shocking result when Grand Banks founder and chairman Robert Livingston, 71, as well as his son, chief executive officer (CEO) Robert Livingston II, 42, were voted off the board. Proposals for the re-election of independent directors Michael Gray, 65, and Roger Langdale, 76, also failed to go through. That meant the six-man board would have only two members. Grand Banks reacted quickly, and last night announced that the remaining members of the board decided it was in the interests of the company for the four men to be reappointed 'so that there is a full complement of directors familiar with the business of the company to oversee its management'. Among them, the elder Mr Livingston is the company's largest shareholder, with 28.58 per cent of the firm. He was reappointed as non-executive chairman. Grand Banks said it will consider new candidates for the board of directors and may restructure the entire board 'in an expeditious and orderly manner'. What may have made shareholders fed up with the current management is Grand Banks' pre-tax losses for the last three financial years. Its market value has fallen below $40 million. Although this meant it entered the dreaded Singapore Exchange watchlist for money-

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AB1201 Financial Management

News Critique Proposal

losing firms, last month, it was granted a waiver from entering the watchlist until Dec 1, due to a proposed $45 million share subscription by a white knight, European investment firm Investindustrial Asian. Under the deal, Grand Banks was to have sold new shares to Investindustrial at 33 cents each, giving the firm majority control. This was meant to give the company a new lease of life but at the extraordinary general meeting following the AGM, shareholders also voted this deal down. Investors were arguing that the 33-cent offer price to Investindustrial undervalues the company. Although the stock last traded at 32 cents, the net asset value per share at June 30 was over 50 cents. Shareholders were suggesting that Grand Banks could have asked marine or shipyard firms for investments, rather than Investindustrial. The meetings, attended by some 100 shareholders, lasted some three hours. After the results were announced, both Mr Livingstons left quickly. Grand Banks was listed in Singapore in 1987 and has cultivated a name for itself in the yacht business. jonkwok@sph.com.sg In a twist to the saga, Grand Banks said late last night that it was going to reappoint Mr Livingston II (above) and his father in the interests of the firm. Singapore Press Holdings Limited Document STIMES0020111012e7ad0002t

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AB1201 Financial Management

News Critique Proposal

Proposed Outline*
Intro Summary of the news

Conceptual Analysis Form of the business organization Grand Banks Yachts (GBY) Goals of corporation Corporate Valuation Diversification Principal-agent problems

Data Analysis Brief overview of the stock price history Analyse the risks and rates of return GBY's stock performance in relation to the stock market Analysis based on the comparison between the GBYs stock price and SML Factor of stock market efficiency Miscellaneous

Conclusion Anticipation for future Suggestions for GBY Reiteration of main points

Appendix Diagrams and tables References

*Actual content of the critique will be adjusted to word limit.

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