Myself and several other frustrated shareholders of Excelsior Capital (ASX:ECL) recently initiated an activist campaign to try and convince the Board of Directors to address the substantial discount the stock trades at:

  • Electrical Components business worth $2+
  • Investment portfolio worth $0.69
  • Franking credit balance worth $0.80

Total value of $3+ and the stock, prior to our engagement, trading below $1.20

Despite most of the votes cast by shareholders other than the controlling Catelan shareholder Group voting in favour of our resolutions, the Board still refuses to even engage with us.

We have our own capital at risk in this investment and are totally aligned with all shareholders. As such we have decided to requisition an EGM to oust the current Chair. In what is becoming typical of the current Board, they either decided to, or erroneously left out our members statement which was attached to the 249D filing we made last week.

To keep shareholders full informed as to what is going on at their company, I decided to repost it here for all to see.


21 October 2020

the Resolution


Dear Fellow ECL Shareholder,

At ECL’s recent AGM, most votes from ECL’s non-Catelan shareholders were in favour of the two resolutions we proposed.

Before the AGM, we emailed ECL’s Chairman Danny Herceg several queries on different topics.  Attached are Danny’s replies.

What’s that?  You can’t find any attachments?  Well, that’s because there aren’t any.  Danny didn’t reply to us.  Not once.

Then, during the AGM itself, we submitted 32 separate questions.  Danny answered four of the 32, before ending the meeting after around 50 minutes with the stated reason being they’d “run out of time”.  Did Danny – ECL’s Chairman – allow just 50 minutes in his schedule for the AGM?

The few questions Danny did respond to included:

  • The remuneration report appears likely to be voted down, and strongly.  How will the directors change their behaviours in light of that?  What changes will they make in relation to their remuneration?

As those shareholders who attended the AGM will recall, initially ECL claimed there were no questions on the remuneration report.  We immediately sent in a further question, asking how ECL could say that when we most definitely had submitted a question about the remuneration report.  Only then was our question about the remuneration report acknowledged.

  • In around October 2019, ECL paid to Glennon Capital nearly $570,000 for management and performance fees through to the end of calendar year 2021.  That payment coincided with Glennon leaving ECL’s board.  Was a deal done with Glennon, whereby he relinquished his board seat in return for the Glennon Capital contract being paid out?  If so, what were the terms of that deal, and what was the rationale for it?

In response here, Danny asserted that the Glennon Capital contract was “a ten year contract” [sic], and the deal done was “to bring it back to five years, in return for paying out those five years immediately”.

The 2016 prospectus by which ECL detailed the proposal to engage Glennon Capital stated in five different places that the Glennon contract would be for five years.  Nowhere did the prospectus state any other term.

Was the prospectus wrong, or was Danny?

And now, here are some of the questions Danny did not respond to.  Why not? 

Compared to the All Ordinaries Accumulation Index, for the period from 1 January 2017 to 30 June 2020, ECL’s “Investment Portfolio” appears to have delivered underperformance of around 10.5% per annum.  Is that materially correct, and if not, what level of underperformance does ECL say the “Investment Portfolio” actually delivered?

ECL went to some trouble back in 2016 to relist as an “investment entity” with the objective of delivering long term returns.  Why does ECL not provide transparency of the returns, net of fees, actually achieved?  Will ECL commit to doing so going forward?

Glennon Capital is ECL’s “investment manager”, but the portfolio investment decisions are on paper actually made by the JV.  How does that work practically?  Is it fair to say that investment decisions have largely made by Danny Herceg and/or Leanne Catelan?  What qualifications or training do those people have in relation to making investment decisions?

ECL’s CFO role has recently been advertised yet again.  What in the board’s view is the reason for such high CFO turnover?

The CFO role has been listed in the “Family Office” section of recruitment websites.  The advertisement says expressly that the role “would suit applicants who have worked in a family office autonomously”.  What is the rationale for that?  Are ECL’s directors aware that ECL is a listed company with 1 shareholder who is part of the Catelan family, and about 600 shareholders who are not part of the Catelan family, and that ECL must be directed for the benefit of all shareholders?

But for the activist campaign being run by the “ECL Activists” group, when would you have disclosed the “review” that began in Q1 but was only publicly disclosed on 19 August 2020?

Since 2011, ECL has repeatedly asserted that Leanne Catelan indirectly holds ECL shares via the company “LJ Catelan Superannuation Pty Ltd”.  That company has never existed.  This issue was brought to the board’s attention weeks ago.  When will ECL remedy this nine-years-standing mistake?

ECL recently issued a revised Corporate Governance Statement, only weeks after issuing the last one.  Did ECL do so because errors in that document were brought to ECL’s attention by the ECL Activists group? 

Did ECL recently engage lawyers to send the ECL Activists group a letter complaining, inter alia, of emails being received by Leanne Catelan at her “personal email address”?  Was that “personal email address” one that ECL had itself listed on a public document, published to ASX, as being Ms Catelan’s email address?  If so, why do the directors of ECL consider that the money spent on that lawyer was an appropriate use of company funds?

On the day that ECL publicly disclosed the “review” that commenced in Q1, ECL’s share price rose 22.51%.  Did any of ECL’s directors buy shares in ECL between the commencement of the “review” and the public disclosure of it?

For our part, we have great difficulty reconciling the lack of response to any of these questions with Danny’s assertion – made during the AGM itself – that the board “hopes to encourage greater participation by shareholders”.

We also have trouble reconciling another thing Danny said in the AGM: that questions not answered during the AGM would be answered after it.  Well, Danny, we’re still waiting.

And, finally – why did we not hear from Leanne Catelan at the AGM?  Does Danny consider we don’t want to hear from ECL’s controlling shareholder?

We think it’s time ECL actually listened to shareholders, and properly engaged with them.

We think if that’s not occurring now, then it’s time for a new leader.

We think it’s time to #DeleteDanny.

Warwick, Vera, Elvis, Ben, Katerina, and Daniel


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