Charles Allen – Lord Allen of Kensington, the former chief executive of ITV – hasn’t been entirely invisible in his new gig as independent chairman of THG, the Matt Moulding-led online beauty and nutrition retailer that has a wild ride (mostly downwards) since arriving on the stock market in 2020 with a price-tag of almost £5bn.
Allen has shuffled a couple non-executives off the board and hired a couple of newcomers, thereby fulfilling his plan on appointment in March to “refresh” the lineup. But one might also expect a chairman of a company with THG’s share price – a humbling 52p versus the 500p listing price – to be more vocal. He is, after all, in his £400,000-a-year post to generate confidence among investors that Moulding’s tech creation will be more conventionally managed in future and will come good in the end.
Now would be a good moment for Allen to find his voice. As we report today, Allianz Trade, one of the UK’s largest credit insurers, has reduced its cover for suppliers to THG. This development may just be a piece of housekeeping on the part of Allianz, but it is the sort of thing that usually prompts a full-throated statement of confidence from a retailer’s chairman.
Allen could also explain to THG’s frustrated investors why Moulding is still clinging to the “golden share” with takeover-blocking rights that he promised to surrender. It was back in October 2021, a week after a disastrous presentation to the City had crashed the share price by 35% in an afternoon, that the pledge was made. “In furtherance of good corporate governance,” said THG, Moulding “has confirmed his intention to cancel his special share rights”.
It was a significant concession, and was meant to pave the way for THG to apply to switch from a standard stock market listing to a premium one, which is what most grown-up governance-compliant companies have. The move would happen “in 2022”, said the October 2021 statement.
Some 14 months later, neither reform has happened. On the listing promotion, THG seems to have decided to wait until the Financial Conduct Authority has concluded the second stage of its review of the listing regime, which won’t happen until next year. But Moulding obviously doesn’t have to hang around for the FCA: he could cancel his golden share at any time.
Since the special rights dissolve anyway in September next year, one could take the view that nine more months of delay wouldn’t matter terribly at this late stage. One would, though, expect a high-profile chairman to explain what’s going on. Did Moulding demand to keep his blocking rights after the speculative bid interest this summer? Has he been let off his cancellation pledge? If so, shouldn’t shareholders be told?
Balance shifts for Capricorn Energy
In its last incarnation as Cairn Energy, the Edinburgh-based oil explorer had an exciting life threatening to seize overseas assets of the Indian government. It ultimately won that battle over tax, as an international ruling said it should, and secured a $1bn (£820m) settlement. Now, though, the board finds itself up against a more formidable foe: a chunk of its own shareholders.
Rebranded as Capricorn Energy, and stripped back to its Egyptian operations plus a few exploration interests elsewhere, the firm has proposed two unpopular mergers in a matter of months. The first, with Tullow Oil, was scuppered in September after resistance from investors. The replacement deal, with NewMed of Israel, is superficially better in terms of value but the reception has been equally poor.
Palliser Capital, a hedge fund with a 7% stake in Capricorn, wants to vote off seven of the nine directors, including chief executive Simon Thomson and chair Nicoletta Giadrossi. Just the usual games of brinkmanship from an uppity US agitator looking to sweeten the merger terms?
That was a possible interpretation until the very respectable name of Legal & General Investment Management joined the revolt on Tuesday, saying “we believe a change of directors is now warranted”. The addition of LGIM’s 4% stake means the rebels now control about a third of votes.
The board’s options look limited at this point. If Capricorn is really committed to trying to save the NewMed deal on the same or revised terms, it will have to invite a few of Palliser’s proposed directors, some of whom are credible industry names, into the tent. Giadrossi will have to go as chair to make room, and probably the long-serving Thomson too. There’s no point fighting the facts: LGIM’s intervention has changed the script.