Vote on plan to get rid of contractor’s three non-execs will be held next month
Lakehouse founder Steve Rawlings has told Building he wants a return to the board of the company he set up because the value of his stake has dropped by nearly half in just four months.
A profit warning in February halved the shares meaning the value of Rawlings’ 15.5% stake – which amounts to just under 24.5 million shares – now stands at £12.1m. Four months ago, his stake was worth £22.8m.
Asked whether he was intervening as a direct result of the fall, Rawlings (pictured) said: “Yes is the simple answer. It’s gone badly wrong.”
Rawlings and fund manager Slater Investments, who between them own more than 20% of the business, are demanding that Lakehouse’s three non-executive directors, Chris Geoghegan, Jill Ainscough and Jonathan Ford, go and are replaced by Rawlings, former Atkins finance director Ric Piper and Robert Legget, managing director of fund group Progressive Value Management.
Rawlings was speaking ahead of publication of a statement today issued by him and Slater Investments urging Lakehouse shareholders to back their resolutions to shake up the board at a general meeting scheduled for April 19.
Lakehouse’s board immediately responded saying it has made an alternative proposal to Rawlings and Slater to create a fourth non-executive director position instead “to avoid further adverse disruption and unneccessary cost”. It once again advised shareholders to reject Rawlings’ and Slater’s resolutions and said it would issue a full response on Monday (4 April).
Speaking about the attempted boardroom coup, Rawlings said: “I’m retired, I don’t want a full-time job but I’d like to know what’s going on and what’s gone wrong. I know the people in that company and they are calling me every week and I think the wrong people are in place.”
“I’d also like to bring a couple of guys with me who I have got confidence in,” he added.
Lakehouse chief executive Stuart Black, who left Mears in 2008 to become Lakehouse’s executive chairman and is now acting as chief executive following the Sean Birrane’s decision to step down in March, said the intervention was “hugely destabilising, we’d like it to stop as quickly as possible.”
The Essex-based group successfully floated on the London Stock Exchange last year, but in February posted a profit warning on the back of the government’s squeeze on social housing.
Rawlings said he was concerned the firm’s regneration arm is “going backwards”. Analysts at Peel Hunt have commented that this side of Lakehouse’s business has taken a hit in 2016 from “clients curtailing anticipated planned maintenance programs” due to social landlords cutting back capital works.
Rawlings admitted he was still working on what to do if he gets back onto the board. “We haven’t got a plan, until we get inside the business, get access to the figures and talk to the people then we can understand where it’s going wrong and do something about it. I would always say the company is always about the people and Lakehouse had a good reputation. At the moment Lakehouse is wounded.”
In a statement released to the Stock Exchange just before Easter, Lakehouse said shareholders should vote against Rawlings’ plans and added that his “lack of involvement in the Group and track record as a director since 2012, together with his lack of experience as a director of listed companies, does not suggest that he has the necessary skill set to be able to provide a meaningful contribution to the Board or the Group going forward”.
It added that Rawlings and Slater had “caused unnecessary disruption to, and uncertainty within, the operations of the business at a time when the Board wants to focus on the trading performance of the Group”.
And chairman Chris Geoghegan said a lack of a plan from Rawlings and Slater was worrying: “Their silence on this important matter is especially concerning given they are asking to remove every single existing Non-Executive Director and to replace them with their own candidates.”
Speaking this week, Rawlings said that the people he wanted to bring on to the board “know about managing plcs”.
He also said: “It’s all about the shares. We think we’ve got the majority of the shares or we wouldn’t have called it in the first place. Even if they won, no board can survive without the support of the major shareholders.”
Rawlings set up Lakehouse in 1988 stepping down as chief executive in October 2014 in order to spend more time running his training-focused social enterprise Building Lives.