Shareholder Activism wins at Leaf Clean Energy

This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Leaf Clean Energy (LEAF) is an investment trust that specialises in “renewable energy and sustainable technology”. It raised $386 million in 2007 but subsequently bought back some of its shares giving an effective net figure of $307m. At June 2013, net assets were reported as $183m, i.e. substantial losses have been made, and the latest interim figures announced yesterday (26/3/2014) reported another $1.8m of losses. A more extensive analysis of the issues at the company was given in the last ShareSoc Informer newsletter. It certainly looked to be “a suitable case for treatment” (to echo the words of that well known 1960s film).

Crystal Amber, an investment company, who hold 10% of the stock, requisitioned an EGM  to replace the Chairman and Chief Executive with two new directors. Yesterday the board conceded defeat without putting up a fight (and the EGM requisition has been withdrawn). That is somewhat surprising considering the relatively small holding of Crystal Amber, but presumably the board consulted other large holders and realised the game was up. The company announced that Peter Tom and Brian Keogh have “tendered their resignation as directors” and that Stephen Coe and Mark Lerdal (who had been put forward by Crystal Amber) will be appointed directors with effect from the 1st April.

As Crystal Amber’s stated objective was to put the company into an “orderly run off mode”, it seems likely that this is what will now happen. The share price has not reacted significantly to this news even though the shares are on a very substantial discount to the claimed asset values. Perhaps investors doubt the asset values, or see some difficulties in exiting from a lot of the company’s holdings.  But it is surely good news that vigorous steps now look likely to be taken to improve the position of shareholders in this company.

Roger Lawson

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