Premium Investors board advises against Dixon Advisory proposals

Premium Investors’ board has responded to a meeting request from a number of Dixon Advisory’s shareholders to consider the removal of the current board, to be replaced with Dixon Advisory staff, as well as amendments to the company’s constitution.

Premium’s board has advised its shareholders that it is considering the proposed resolutions but feels they are not in the best interests of all shareholders.

“We were surprised to receive the approach from Dixons, as Premium Investors has significantly outperformed both Australian and international equity markets,” said Mark Burgess, chief executive, Treasury Group, whose subsidiary, Treasury Group Investment Services, is Premium’s investment manager.

“During the market correction the Premium share price did not fully reflect this outperformance, although this gap has closed significantly as Premium has proactively managed it capital and spent time explaining the benefits of its outperformance to new and existing shareholders.”

Burgess also noted that Dixon Advisory is only one of the shareholder groups and “the board would expect independence and representation of all shareholders to be important”.

“The board is considering the proposal but clearly feels that a variety of positive steps have been put in place which are focused on closing the discount and getting full recognition for the outperformance of the underlying assets,” Burgess said.

Premium chairman Tom Collins noted that the request asked for consideration of “substantial changes” from “a small number of our shareholders, some 120 in number who represent approximately 1.6 per cent of the issued capital”, all of whom are Dixon Advisory clients.

Aside from changes to the existing board, the request also asked shareholders to consider amending the constitution to allow them the power to direct the new board to wind up the company or undertake a share buy-back/capital reduction.

Collins said the board believes the proposed resolutions will not result in “adequate or appropriate returns to shareholders”, noting that Premium currently has a strong balance sheet and sound management.

“We consider that the combined expertise of the Treasury Group and its boutique fund managers will deliver competitive returns to shareholders,” Collins said.