ECHO Entertainment Group (ASX:EGP) chairman John Story (pictured) has surprisingly resigned in the face of a national campaign by billionaire James Packer to unseat him at an extraordinary general meeting (EGM) next month.
Australian Rugby Union CEO John O’Neill, a current Echo Board member, has been appointed as acting chairman.
Packer, who owns rival gaming operation Crown and is a 10 per cent shareholder in Echo, has placed full-page advertisements in newspapers around the country over the last week calling for Story to be replaced as Echo chairman by former Victorian Premier Jeff Kennett.
The advertisements compared Crown’s growth to sluggish Echo operations in recent months and criticised the company for its handling of the sacking of former Star City Sydney casino general manager Sid Vaikunta.
Echo operates three casinos in Queensland: Treasury in Brisbane, Jupiter’s on the Gold Coast and Jupiter’s Townsville.
Packer has been seeking regulatory approval to gain a bigger slice of Echo. It is speculated his long-term plan is to use the company’s Sydney licence to build a new $1 billion luxury gaming facility across the harbour at Barangaroo.
One of Echo’s largest shareholders, Perpetual Investments, today announced it would not vote for Kennett at the EGM. But the decision to remove Story before the EGM suggests the Echo board was not confident its chairman would win a ballot against Kennett.
In a statement released today quoting O’Neill, Echo describes the current events as “challenging times’’.
“The Board of Echo has formed the view that the ongoing disruptive campaign, concerning the resolution proposed to be put to an EGM of Echo for the removal of Mr Story, was damaging to the company and that it was in the best interests of shareholders that Mr Story not contest the resolution,” says O’Neill.
“The Board thanks John for his dedication and commitment to Echo, and previously Tabcorp Holdings Limited, over many years. It was thanks to John’s leadership that we have achieved the de-merger from Tabcorp, which has crystallised significant value for our shareholders in challenging times.”
EGP’s share price was up 3.26 per cent to $4.44 on trading before the announcement. The market appeared to welcome the change with shares trading higher during the afternoon.
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