Cirrus Networks board director Paul Everingham has said he will resign from the company’s board if Webcentral is successful in ousting the three other directors.
Webcentral has been looking to take over the Perth-based MSP through a shareholder vote The company is an 8.86 percent shareholder of Cirrus. It is offering to buy out Cirrus at $0.032 per share, which was rejected repeatedly for not paying “an appropriate premium” and
As part of the takeover, Webcentral wants to appoint CEO Joe Demase and company secretary Michael Wilton to Cirrus’ board and remove managing director Matt Sullivan, board chairman Andrew Miller and non-executive director Daniel Rohr. Everingham would be the only holdover in the company’s proposal.
Cirrus Networks shareholders are set to vote for these proposals from Webcentral during the requisition meeting on 15 October 2021.
“I have advised the board of my current intention to resign from the board immediately following close of the requisition meeting if both of Webcentral's nominee directors, Messrs Joe Demase and Michael Wilton are appointed to the board,” Everingham told Cirrus shareholders in a letter posted on the ASX.
“This may result in [Cirrus Networks] being without any independent governance until the board is refreshed and would result in Cirrus (as controlled by Webcentral's nominee directors) needing to appoint another director to comply with the minimum company director obligations under the Corporations Act, in the event of all resolutions being carried.”
Everingham also told shareholders to consider Webcentral’s most recent unaudited preliminary financial report, which covers its FY21 financial results for the 18 months to 30 June 2021. The web hosting provider reported a loss after tax of $62.6 million, or a net loss of 46.46 cents per share.
Webcentral last month justified the takeover by claiming Cirrus had “a number of serious deficiencies” in its financial and operational management and performance, and suggested that its management team and board were “distant” and “not sufficiently engaged” in day to day operations.
In its FY2021 financial year results, Cirrus reported 12 percent revenue growth to $106 million while EBITDA declined from $3.7 million last year to $2 million, citing COVID-19 restrictions in Victoria during the period, skill shortages and the global semiconductor shortages.
“In conclusion, the Cirrus board is concerned the shareholder requisition puts the company’s strategy at significant risk, disrupting progress that has the potential to generate significant value for all shareholders,” Everingham said.
“The Cirrus board remains fully committed to continue acting in the best interests of all shareholders and thanks them for their support.”
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