By Triana O'Keefe, editor Australian Hotelier
In April this year, Lantern Hotel Group received notice from shareholder Millinium Asset Services Pty Ltd of a general meeting to be held on Wednesday 24 June.
The notices, issued pursuant to section 203D and 249N of the Corporations Act, seek the removal of three directors by ordinary resolution at the proposed meeting and the appointment of two new independent directors.
As a 24.31 per cent shareholder, Millinium expressed "grave concerns" regarding its investment in Lantern in both a financial and operating capacity as well as corporate governance.
Millinium believes the three directors in question for removal (Brian Mogridge, Russell Naylor and Deborah Cartwright) lack relevant industry experience in hotels and gaming, property and managing ASX listed companies, which Millinium regards as necessary to "maximise shareholder value and returns".
As such, Millinium believes the nominated new directors (John Murphy and Graeme Campbell) are ideally suited to maximise value as they bring deep relevant hotel, gaming and hospitality experience; a plan to maximise value in the short term; and independence from all of the majority shareholders.
One of the key concerns raised in the ASX announcement is the current financial performance of the company.
"Lantern has delivered very poor financial results over the past two years," the explanatory memorandum stated.
"Despite having over $97 million of net assets, under the current direction, Lantern delivered a loss in FY14 of $2.15 million."
As the only non-executive director Millinium are not proposing to remove, Julian Davidson has this week written to all Lantern Hotel Group shareholders informing them he does not support the proposal.
"I do not support Millinium's proposal and encourage you to vote against all five of the Millinium resolutions."
After acquiring the Icon Group in 2012, Davidson believes the board inherited properties that failed to meet multiple regulatory certification, minimal to nil capital expenditure, a history of deferred maintenance, hotel gaming products which were out of date and little to no quality food or amenity offerings.
"Unfortunately, hotels that are allowed to operate in this fashion attract a type of clientele that may inhibit future growth, by making the venues unattractive to people with greater levels of disposable income," he said.
"Faced with this situation across the group, the Lantern Board had to undertake major redevelopments throughout the hotel portfolio which created a high level of disruption."
"I have the full confidence in my fellow Board members, and endorse them to continue the turnaround of the Lantern Hotel group that we commenced together three years ago."
The Lantern Group currently owns 13 hotels across New South Wales and Queensland including the Dolphin Hotel, the Cairns Courthouse Hotel and the Bowral Hotel.