Outside shareholders push to remove Chairman.
A battle over domain company Dark Blue Sea’s (ASX: DBS) Board of Directors has erupted, with a significant shareholder calling for an Extraordinary General Meeting to remove the existing Chairman and insert two of its own to the board.
Photon Group Limited, which owns about 28.25% of the company, called for the meeting and election. The group cites a nearly 75% drop in year-over-year profits for pushing for the change.
In its request (pdf), Photon writes “The existing DBS Board appears ill-equipped to respond to the challenges which they currently face.”
The existing DBS Board claims that Photon’s real motive is to gain control of the company without paying a premium. The Board cites Photon’s heavy debt and suggests Photon is “now focused on reducing the debt burden by any means possible”.
In a letter to shareholders, the Board wrote:
Photon may potentially change the strategy of Dark Blue sea in a way that will benefit Photon shareholders and not all Dark Blue Sea shareholders…The Directors of Dark Blue Sea believe that Photon is looking at Dark Blue Sea as an opportunity to reduce their debt be either selling the company, introducing significant debt onto Dark Blue Sea’s balance sheet by buying one or more of Photon’s businesses, or starting aggressive business activities to boost short term profitability at the expense of longer term shareholder value”.
Dark Blue Sea claims it is handling the current economic crises well, cutting headcount by over 50% to 23 and “discarding” marginal domain names in its portfolio. Dark Blue Sea is mostly known for its Fabulous domain registrar and parking service.
The meeting will take place on Friday, August 14, 2009.