Ecofibre heeds calls for industry experience, appointing seasoned textile exec as CEO

Ecofibre heeds calls for industry experience, appointing seasoned textile exec as CEO

Ecofibre's (ASX: EOF) incoming CEO and managing director Ulrich Tombuelt.

Following months of calls within the ranks of Ecofibre (ASX: EOF) to lift leadership and governance expertise in its specific industries of medicinal cannabis, hemp and textiles, the board of the beleaguered company has taken a step in that direction by appointing Ulrich Tombuelt as managing director and CEO.

Tombuelt has worked in the textiles industry since the late 90s in Germany and the US, where he is currently CEO of fabric applications group Sattler USA.

The incoming executive's current employer is based in Hudson, North Carolina, just a short drive west of Ecofibre's textile manufacturing operations in Greensboro where a US$10.4 million sale-and-leaseback agreement fell through last week.

When Tombuelt starts on 5 August he will also be president Ecofibre Advanced Technologies (EAT), the group's highest revenue-generating division whose former president Jeff Bruner resigned in May following an ultimatum threatening to leave unless chair Vanessa Wallace and director Michele Anderson departed the group.

Bruner, who founded high-performance textiles manufacturer TexInnovate which was acquired by Ecofibre for US$42 million ($59 million) in July 2020, has joined a lawsuit against Ecofibre initiated by its former chief scientific officer (CSO) Dr Alex Capano.

The legal claim alleges several Ecofibre directors were "conflicted" in their dealings with the company and its subsidiaries, in addition to an allegation from Capano that she was fired in retaliation after invoking Ecofibre's whistleblower policy.

The complaint before the the Court of Chancery for the State of Delaware was precipitated by Capano's complaints to the board in which she invoked the whistleblower policy with allegations of misconduct against then CEO Eric Wang. 

Wang joined Ecofibre in 2016 as chief financial officer (CFO) before leading the group from late 2017 through its initial public offering (IPO), and was at the helm for a brief moment while the company achieved unicorn status that same year with a valuation of $1 billion. Today it is worth just $9 million.

Ecofibre announced on 28 November 2023 that Wang had tendered his resignation, just 10 days after Capano claims she emailed several Ecofibre directors reporting Wang's alleged misconduct.

Wang, who is not a defendant in the case, described the allegations as "categorically false". Ecofibre has stated that the legal proceedings "rely on assertions that are factually incorrect and without foundation" but declined to specify which of the numerous assertions it is referring to in the comprehensive legal document. 

Chair Vanessa Wallace, who is also a non-executive director at Wesfarmers (ASX: WES) and Seek (ASX: SEK), took on the role of interim CEO after Wang left - a responsibility she held until the baton was passed to US-based advisor John Foley in May, just days before Bruner's exit. 

The lawsuit alleges that in the new year Ecofibre "conjured" up a false cause to place Capano on administrative leave following her communications with major investor and former chair Barry Lambert, who alongside Wang had recruited her to join Ecofibre USA (EUSA) in 2017.

It is alleged that on 11 January she wrote to Lambert expressing enthusiasm for his investment in the biotech arm of Ecofibre that she led, to which he allegedly responded: "I have run out of patience. Hopefully [Wallace] can quickly turn around results, finances, and behaviours. The music has stopped".

Capano alleges that two days later Wallace wrote her an email claiming she was "not authorised to speak to shareholders", and on 10 February she was placed on administrative leave. 

Around the same time on 17 January Phil Warner, Ecofibre's original founder and substantial shareholder who had brought on Lambert as an investor many years before the IPO, issued a notice calling for the appointment of hemp industry veteran and ECS Botanics (ASX: ECS) founder Alex Keach to the board.

Warner's reasoning was that Keach would bring expertise to a board he alleged had "never appointed a replacement director with any substantial level of hemp industry experience or knowledge".

The motion was defeated at a general meeting in February, but was not a resounding victory for the incumbent board's position as 27.5 per cent of votes were cast in favour of Keach.

Today's announced appointment may not address the founder's concerns around hemp industry expertise, but the incoming CEO is nonetheless an expert in the textile sector which EAT operates in. Until he starts, Foley will remain with the company as an adviser over the coming months to ensure a well-managed transition. 

The group is upbeat about what Tombuelt can bring to Ecofibre, having created value in multiple manufacturing and distribution businesses, including developing strong customer relationships, spending most of his career in the US and Germany, along with experience in successfully establishing manufacturing operations in China.

Ecofibre reports he is passionate about sustainability and the opportunities for Ecofibre as the market for sustainable solutions continues to grow.

"We are very pleased to have an executive of Uli’s capability and experience join our team," says Wallace.

"His financial acumen, commercial sales experience and people leadership skills are what Ecofibre needs. We look forward to Uli leading the business profitably into the next era of growth.

"On behalf of the board, we thank John for his recent leadership and impact. We are pleased that he will be continuing his commitment to the Company in an advisory capacity for the next few months to support a smooth transition with Uli."

Tombuelt will be on a base salary of US$300,000 ($446,000), which is higher than what Wang's base salary of US$220,000 ($327,600) in the year before he left although his total remuneration that year was $814,869, and more than $1 million the previous year, when including share-based payments.

Tombuelt has also been issued three million shares upfront, worth $84,000 based on the current share price, which can be progressively vested after the first anniversary over three years.

He will also be given performance-based equity with more shares granted at certain milestones if the company's market capitalisation increases. In the early stages of any recovery of Ecofibre's value to hit market capitalisation levels of $50 million or $100 million, he would receive 3 per cent of the total value uplift.

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