Telenet shareholder Lucerne has written a letter saying it will start legal proceedings if the Belgian company and its board don’t comply by August 1 with demands tied to Telenet’s relations with its parent, Liberty Global, reports Belgian newspaper De Tijd.
The stakes of the battle are the close intertwining of Telenet and Liberty Global, according to Lucerne. Since the unsuccessful takeover bid in 2013, the latter owns 57.8% of Telenet’s shares. Lucerne owns 2.8% in the Belgian cable operator.
In a new letter to Telenet Lucerne is now increasing the pressure. By August 1, the date when Telenet will publish its half-year results, the activist investor demands the publication of all kinds of additional information. If the telecom operator does not comply, Lucerne will go to court.
Lucerne says “decision mandates” from Liberty Global mean that Libety CEO Mike Fries calls the shots; it’s charging Liberty with artificially keeping Telenet’s share price low to allow for a squeeze-out of minority holders.
“The majority of the Telenet board votes as Mr. Fries, who does not have any function at Telenet, it wants to,” says in the letter. Fries already referred to Telenet as a ‘daughter under her control’, according to Lucerne.
There would also be an ‘inadmissible’ flow of information between the management and Liberty. CEO John Porter and his CFO are required, according to Lucerne, to report every month to their counterparts at Liberty Global. The same applies to hundreds of other Telenet managers at their Liberty ‘superiors’. Finally Lucerne also mentions multi-year plans, of 3 to 4 years, with which Liberty monitors the performance of Telenet.
The entire corporate governance of the company is a “hoax,” Lucerne’s letter says; many managers are expected to deliver monthly reports to counterparts at Liberty. The investor claims the Telenet board is over-run by the majority Liberty Global representatives, violating the Belgian corporate governance code.
It’s asking for details on shares/option rights in any Liberty Global entities held by Telenet’s directors; details of application of conflict of interest rules for Liberty-nominated members; and more information on the information-sharing arrangement between the two companies.