Board’s bizarre change causes shareholder rebellion
A shareholder rebellion has broken out in a company originally set up to provide healthcare services to Melbourne's tram workers, amid claims it is risking funds on property investments it is not qualified to oversee.
Upset shareholders in the 132-year-old institution - most of whom are former tram workers or their families - say Longevity Group Australia has lost its reason for being after it transformed from a not-for-profit health mutual into a luxury property developer.
They also say Longevity is failing to meet its obligation to call a general meeting to vote on whether to spill the board within the required time frame and is using a planned share buyback to entrench the long-serving board's power by buying out disengaged shareholders ahead of the vote.
Under a share buyback, a company buys its own stock, reducing the number of shares on issue and increasing the ownership stake of remaining shareholders. Shareholder and former tram worker Dennis Michael said shareholders would be best served by selling the company's assets and returning funds to shareholders.
He questioned why the Australian Securities and Investments Commission provided Longevity with an exemption from needing shareholder approval to hold a buyback, given the board was facing a vote to topple it.
"The regulator is there to have an efficient market and that is not happening here," Mr Michael said.
"I'm not interested in calling the directors names or anything like that - all I want is a fair vote to get rid of them."
Longevity started in 1888 when tramway workers began pooling their funds to cover sickness and funeral expenses.
In 2014 the not-for-profit, then known as the Transport Friendly Society, was demutualised and more than 4000 members given shares in the unlisted public company.
Longevity, chaired by former IOOF managing director Martyn Pickersgill, has since sold assets including Vimy House Private Hospital, now St Vincent's Private Hospital in Kew, an aged-care facility and retirement village in Mornington and a dental clinic in Richmond. It has rebranded itself as a luxury property developer for "empty nesters", with a portfolio of four projects in Melbourne's eastern suburbs, three of which remain in the planning stage.
Longevity said it was being targeted by a small group whose proposal to liquidate the company risked wiping out shareholder value, particularly given the dark coronavirus clouds over the economy.
"The (Longevity) board is confident that its long-term strategy is in the best interests of shareholders and will result in future value generation for shareholders," it said.
Originally published as Board's bizarre change causes shareholder rebellion