A privately owned housebuilder, Sunley, which expects to have a turnover of £30m this year, has launched a bid to oust the management team of £124m turnover Tay. The move follows a 20% decline in the value of Tay's shares last year, despite the buoyant housing market.
Sunley, which has a 10% stake in Tay, has the backing of 15% shareholder Phillips & Drew in its bid.
Sunley joint chief executive Richard Tice has called for an extraordinary general meeting to vote on a proposal to remove Tay chairman Norman Stubbs, chief executive John Swanson, finance director Stephen Evans and non-executive director Jack Green. The meeting has to be held within the next 44 days. If the proposal is accepted by shareholders, Tice would resign from Sunley and take over as chief of Tay.
Tice told Building: "We're obviously confident we can do it. We've already got 25% of the votes we need in the bag, so it shouldn't be too difficult to get the rest." Tice said Tay had failed to perform because of its debt burden and high costs. He believes the housebuilder's low share price – valued this week at 106p against a net asset value of about 160p – meant it was wide open for a hostile takeover bid.
He said: "We are not a hostile bidder, we are merely an active investor. What we are saying to the other shareholders is 'enough is enough'. We want to come in as a professional management team to create better shareholder value." A Tay adviser said the company would fight the challenge. "They are trying to shoehorn themselves onto the board without paying any money or making a formal bid." He defended Tay's record, pointing out that the Tay management team had been trying to improve the company's performance, and had carried out a strategic review last year. The principal result of that was that the company had begun to wind down its North-west regional business to reduce overheads and gearing.
He said: "Tay has thought about its future and come up with a strategy. Its vision comes within an ace of what Sunley wants to see the company do. The only question is who should run the company." Tay made a pre-tax profit of £6.6m in the year to 30 June 1998.
