Bubs board spill fails at heated shareholder meeting

A barely audible "you've ripped us off" could be heard via the virtual link at the end of the Bubs Australia (ASX: BUB) extraordinary general meeting (EGM) this morning, coming from a dissenting shareholder who was giving chair Katrina Rathie a spray over her handling of the embattled company. 

Rathie kept her cool, did not encourage assisting staff to give the man a microphone, and pronounced that the meeting was over.

"Thank you sir, the meeting has closed and I have heard you loud and clear. Thank you all for attending the EGM and your continued support of Bubs," she said.

Votes have now been collected from that meeting to determine the fate of the infant formula group, with investors deciding not to oust the board or instate new leadership.

The meeting was called by a group of requisitioning shareholders who own just more than 5 per cent of all shares, including  founder Kristy Carr, former chairman Dennis Lin, and Chinese distribution partners AZ Global among others.

In the lead-up, the board has traded barbs with aspiring directors and executives, including Rupert Soar, Peter Nathan, and James Jackson.

After proxy votes leaned in favour of the incumbents, the final count shows votes were against all resolutions proposed by the requisitioning shareholders. 

But it is a pyrrhic victory for the current board comprising Rathie, Paul Jensen, Steve Lin and Reg Weine, as the level of dissent in the proxy votes ranged between 36.74 per cent and 37.99 per cent.

In other words, almost two in every five shareholders who sent wants change.

One of those investors is Chemist Warehouse founder Jack Gance, Bubs' second-largest shareholder, who did not mince words in the meeting, voicing his displeasure at the way Carr and Lin had been dismissed from the company.

"I personally have spoken to you about it and asked for the reasons why they were dismissed, and I really didn’t get an answer that I was comfortable with. I was just wondering whether this is the way the business will continue?" he said.

Gance also floated a figure of $5 million that he believed had been spent by the board on fighting the campaign. He asked Rathie whether the amount spent in the campaign to keep the board was "in the thousands or millions".

"We respect your right as our second-largest shareholder Mr Gance to hold the opinions that you do," Rathie replied.

"The board was placed in a position where this meeting was requisitioned, and we have the responsibility to respond.

"I do not know the precise figure involved, but I can assure you it is certainly not in the millions of dollars."

After the final result was announced, Bubs Australia described votes in the incumbent board's favour as a "clear vote of confidence" and a "strong endorsement" of the commitment to good governance, growth, and rebuilding shareholder value.

"We are delighted with the result and thank each and every one of our Bubs shareholders, customers, suppliers and employees for their continued loyalty and support," Rathie said.

"Approximately 48 per cent of our institutional and valued individual shareholders voted. This is an excellent voting turnout for Bubs that reflects well on our shareholders, demonstrating a high level of engagement and interest in the company’s future direction.

"Excluding the requisitioners’ votes, the Board received resounding support and a clear mandate from more than 70 per cent of voted shares."

She said such "widespread" support was pleasing, and with the shareholder action "now behind us" she wanted to deliver on the company's strategic plan with a particular focus on the USA and resetting the China business.

"We acknowledge there is a lot of work to do, there are significant challenges as well as great opportunities ahead and that shareholders expect to see a reversal of the company’s performance over the past two years," the chair said.

"A silver lining to the events of the past few weeks has been that the Board has been given the opportunity to listen and learn from our shareholders.

"With the shareholder vote now behind us, we expect to make a CEO appointment in August 2023 and move forward to execute on the strategic vision and exciting opportunities in front of Bubs."

Despite all the animosity that preceded the meeting, in her opening speech Rathie acknowledged Carr and Lin for "their hard work, energy and entrepreneurial spirit in creating the Bubs brand and business".

"We wish them well in their new venture together," she said.

Rathie also urged all parties to unanimously accept the outcome of each resolution today, "even if it is not their preferred outcome, and move on in the best interests of the company".

"Irrespective of the voting outcome, there are still significant issues, challenges and opportunities facing the company which will require steadfast focus from our team as the business resets," she said.

At the time of publication, BUB shares are down 13 per cent at 20 cents per share.