Pact Group Holdings Ltd (PGH) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Pact Group Extraordinary General Meeting. [Operator Instructions]. I would like to hand over to our presenter today, Chair, Raphael Geminder. Thank you. Please go ahead.

Ladies and gentlemen, welcome to the 2024 Extraordinary General Meeting of Pact Group Holdings Limited. My name is Raphael Geminder, and I'm the Executive Chair of Pact and Chair of this meeting. I would like to welcome everyone attending. A recording of the proceedings of this meeting will be made available on the company's website. The notice of meeting was sent to shareholders and the ASX on the 10 of October 2024, and I will take the notice as read. The Company Secretary informs me that we have a quorum present. I therefore declare this Extraordinary General Meeting of Pact Group Holdings Limited open. I would now like to introduce your directors and certain senior managers who join me online today. Directors in attendance are Carmen Chua, Michael Wachtel, Nick Perkins, Tristan Smith; and Sanjay Dayal, our Managing Director and Group Chief Executive Officer. Our Chief Financial Officer, Paul Washer; and our Company Secretary, Kathryn de Bont, are also in attendance. Christine Piccola of Computershare, the company's share registry, is also with us today and will be acting as our returning officer. The company is required to hold this extraordinary general meeting as it received consecutive strikes against the adoption of its remuneration report at its 2023 and 2024 Annual General Meeting and the spill resolution put at the 2024 AGM was also passed. All of the company's directors in office when the resolution to approve the 2024 directors' report was passed, other than the Managing Director and Group Chief Executive Officer, will cease to hold office immediately before the end of this meeting. Each of the relevant directors being Mr. Wachtel, Ms. Chua and myself is eligible to seek reelection at the spill meeting and intends to stand for reelection. There are 3 items of business to be considered at today's meeting. Each resolution will be put separately. There is no voting exclusion applicable to the resolutions. Now for some housekeeping matters. Today's meeting is being held online via the Computershare meeting platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can listen to the webcast of the meeting and watch the presentation. In addition, shareholders and proxy holders have the ability to ask questions and submit votes. Voting will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. The final results of the polls will be available later today on the ASX and Pact websites. If you are eligible to vote at this meeting, a vote icon will be visible at the top of the platform. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit the enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. Shareholders and proxy holders may submit questions at any time but will be addressed after all of the formal items of business. Questions should be addressed to and through me as Chair. To ask a question online, please select the Q&A icon at the top of the platform and select the topic your question relates to, type your question into the chat box at the bottom of the screen and press send. These instructions are also available in the online meeting guide. You can submit questions from now until the end of the meeting. For all those shareholders and proxies who wish to ask a verbal question, an audio questions facility is available. Instructions on how to ask a verbal question are set out on the Computershare meeting platform. Please note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. I will address questions at the end of the meeting. We will allow a reasonable amount of time to ask questions. If we run out of time to answer all of your questions, we will endeavor to answer them in due course by e-mail or posting responses on our website. If you require assistance during the meeting or encounter difficulties finalizing your votes, please refer to the online meeting guide or call +613-9415-4024. I now declare voting open on all items. Please submit your votes at any time during the meeting. I will give you a warning before I move to close voting. I'm holding open proxies in my capacity as Chair, and it is my intention to vote all such proxies in favor of all resolutions. Any directed proxies that are not voted at the meeting will automatically default to me as Chair of the meeting, and I'm required to vote those proxies as directed. I have a relevant interest in 88.04% of the company's issued share capital and intend to vote in favor of all resolutions. I will now move to the items of business to be considered at this meeting. As the first item of business relates to my reelection as a director, I will hand over to Michael Wachtel to chair the meeting. Thank you, Michael.

Good afternoon, ladies and gentlemen. Item 1 of business relates to the reelection of Raphael Geminder as a director. Mr. Geminder, who was appointed to the Board on the 19 of October 2010, offers himself for reelection at today's meeting. Mr. Geminder's qualifications, background and experience are summarized in the Notice of Meeting and in the company's annual report. The Board, with Mr. Geminder abstaining, recommends Mr. Geminder's reelection. I will now put to the meeting the resolution, which is set out in Item 1 of the Notice of Meeting and shown on the screen. Please record your vote online for Item 1, if you have not already done so. Valid proxy votes received for this resolution are currently shown online. As indicated in the Notice of Meeting, I intend to vote valid undirected proxies given to the Chair of the meeting in favor of the resolution. I'll now hand the meeting back to your Chair.

I will now move on to item 2, which relates to the reelection of Michael Wachtel as a Director. Mr. Wachtel, who was appointed to the Board on the 21 of April 2020, offers himself for reelection at today's meeting. Mr. Wachtel's qualifications, background and experience are summarized in the Notice of Meeting and in the company's annual report. The Board, with Mr. Wachtel abstaining, recommends Mr. Wachtel's reelection. I will now put to the meeting the resolution, which is set out in Item 2 of the Notice of Meeting and shown on screen. Please record your vote online for Item 2, if you have not already done so. Valid proxy votes received for this resolution are currently shown online. As indicated in the Notice of Meeting, I intend to vote valid undirected proxies given to the Chair of the meeting in favor of the resolution. I now move on to Item 3, which relates to the reelection of Carmen Chua as a Director. Ms. Chua who was appointed to the Board on September 2018, offers herself for reelection at today's meeting. Ms. Chua's qualifications, background and experience are summarized in the Notice of Meeting and in the company's annual report. The Board, with Ms. Chua abstaining, recommends Ms. Chua's reelection. A resolution to reelect Ms. Chua was put before the 2024 AGM immediately prior to this meeting. Computershare has advised that the resolution was passed. I will now put to the meeting the resolution which is set out in Item 3 of the Notice of Meeting as shown on the screen. Please record your vote online for Item 3, if you have not already done so. Valid proxy votes received for this resolution are currently shown online. As indicated in the notice of meeting, I intend to vote valid undirected proxies given to the Chair of the meeting in favor of the resolution. We will now address questions from shareholders joining us today, starting with questions received in writing via the online platform. Written questions will be read out by our EGM moderator, Carolyn Ireland, General Manager of Investor Relations. Carolyn?

Thank you, Chair. To date, we have 3 questions, all from Mr. Stephen Mayne. The first question, why doesn't Raphael negotiate with the minority shareholders who triggered today's second REMS strike and spill meeting and reach an outcome either through Board representation or an improved privatization proposal? This situation is becoming [indiscernible] with thousands of minority shareholders under water, you owe it to us to resolve the situation fairly and equitably.

Thank you for that question, Stephen. I think that's a question for Ken. And in my role as the Executive Chair of Pact, it's not appropriate for me to make a comment. Do we have any further questions?

Thank you, Chair. The next question from Mr. Stephen Mayne. What does Michael Wachtel think of the 2-stuck remuneration report voting system? And could he also please detail the history of his dealings with 2 challenging candidates for the Board at the earlier AGM, David Harris and Mark Gander. Does Michael believe a peace agreement could be reached that one or both of these candidates invited on to the Board to end this embarrassing dysfunction and scrutiny of our poor performance and ongoing mistreatment of minority shareholders?

Thank you, Stephen. I will ask Michael to address the question.

Michael?

Sure. Thank you, Stephen. Let me first say I disagree with the suggestion of any mistreatment of minority shareholders. In regard to the 2 candidates, the Chair has already responded during the AGM on why they weren't endorsed by the Board to become directors. In regard to your questions of my interactions with Mr. Gander and Mr. Harris, I'll start off with Mr. Harris. I met him, in fact, through the takeover in my capacity as the Chair of the Independent Board Committee. And while we might have had different views on the takeover, I found David professional, politely direct and very reasonable to deal with and have respect for him as an individual. In regard to Mr. Gander, I don't believe I've met him. I can certainly say I've had no interactions with him in my capacity as either a Pact Director or as Chair of the IBC.

Thanks, Michael. Do we have any further written questions?

Yes, a third question also from Mr. Stephen Mayne. Very similar, but I will read it out. As a candidate for the Board at this EGM, what does Carmen Chua think of the 2-strike remuneration report voting system? And could she also detail the history of her dealings with the 2 challenging candidates for the Board at the earlier AGM, David Harris and Mark Gander. What does Carmen think would be the best way to resolve this in Pact? And is our Board culture open to criticism and challenge of the Executive Chair and controlling shareholder, Raphael Geminder?

Thank you for that question. Carmen, can I ask you to respond, please?

Yes. Thank you, Chair. Thank you for the question, Mr. Mayne. As the question is very similar to one that was directed to Michael, I would echo Michael's responses barring the fact that I have not met or interacted with Mr. Gander or Mr. Harris. On the questions pertaining to the openness of the Board in accepting criticism and a healthy culture of challenging the Chair's perspective, I would say yes. All Board members are able to objectively analyze the issues before us in the best interest of the company as a whole and in accordance with our duties as directors. It's important to note that we also have robust processes in place to ensure that any conflicts of interest and related party involving the King Group are always disclosed and managed appropriately. Back to you, Chair. Thank you.

Thank you. Any further written questions?

No further written questions. Thank you, Chair.

Thank you, Carolyn. We will now take verbal questions. Operator, do we have any phone line questions?

Thank you, Chair. We have a question from David Harris.

Yes, I have a couple of questions. Firstly, Carmen has been a director for over 6 years. And during that time, the value of the company has been, I suppose, you'd call it decimated. A review of her performance by the other directors who have worked with her for over the last 4 years unanimously recommend to the shareholders that she be reelected. And I imagine the same can be said of Michael in this spill situation. So my question is, in reviewing their performance, what's the criteria considered in reaching the unanimous recommendation for reelection?

Thanks, Dave.

I've got one more [indiscernible] to keep going.

Yes, that's fine. We'll take them as you serve them up. We have a Board evaluation process. It's outlined in our corporate governance statement. So directors provide feedback in relation to the performance of the Board, Board committee and their own performance. We have written surveys facilitated by the Company Secretary. We evaluate results and then circulate them to the Company Secretary, et cetera. So there's a rigorous process, and I would say that there's a good process, and I'm satisfied as Chair that our independent directors are doing an excellent job.

But that's the process, but the -- I'm asking more about the criteria. If you relate the criteria to the overall performance, you wonder whether these things should be sort of more aligned because we've gone down and down and nothing changes really on the Board or senior management. I'm sure the process is fine. But really, as a minority shareholder, you'd sort of hope for something a little bit better.

Yes. Well, all I can say to you is, as the Chair of the Board, I'm satisfied that my independent directors are performing their duties, and they are acting in the interest of all shareholders. Do you have a second question?

Yes, one further question, probably address to you, Michael. And I would like to thank you for the compliments that you made, and I would tell you they align with the similar sentiment of my wife. I suppose my question is that when we met Michael, you said to me and you're acting as the independent, the IBC Chairman, you said at the same time as acting for us, you had signed an agreement with the company. And I think you said this, but you could tell me if I'm mistaken. I think you said that you'd also signed an agreement with the company where in addition to acting for the minority interest, you undertook to try and make sure that the aim of the -- the 90% aim was going to be achieved. Could you just tell me a bit more about that document that you signed?

Yes. No, I can clarify that. As part of the takeover, you might recall that the first offer price was the price which the IBC rejected very directly publicly, and you received my letter on that and so on and so forth. We obviously then went into negotiations with Kin. And as part of eliciting a higher price, one of the conditions that was imposed I would say, at the final back end of the negotiations was that Pact enter into what's called an implementation agreement as part of the takeover. Now one of the things I'm not sure I had mentioned, as part of our advice to minority shareholders, at all stages, I was very concerned to make sure that we acted independently. And in that vein, we retained the leading M&A lawyer who wrote the textbook on M&A in Australia as part of the advisory panel to myself, who approved every single communication that went to minority shareholders. Their advice and the advice of our corporate finance advisers was that we should enter into implementation agreement on the basis that they felt we wouldn't be able to obtain a higher price. And that was the context of the agreement. I don't recall discussing that at the first time we met. I'm not saying we didn't. I don't recall that, but that would be my response to your question.

So I'm just not sure. So what does an implementation agreement involve you agreeing to?

Well, I'm not going to go into the detail. But once again, go back to the original IBC communications where we referred to it. It was merely a standard agreement, which is used in these situations. And it merely meant that in agreeing to the price, we would act in a way which didn't, if you like, contravene the intentions of our agreement. I think to go beyond that in this forum, in an EGM in regard to the reappointment of the directors goes way beyond the scope of this meeting.

Thank you, Michael.

Doesn't that water down your independence or maybe not?

Sorry. I'll just say finally, it was a function of a negotiated outcome. It wasn't a question of the final test there was to get a certain price. We took advice, and that was the outcome of the advice -- of the negotiation based on advice.

Okay. David, thank you for that question. Operator, do we have any other phone line questions?

Chair, there are no further phone questions at this time.

Thank you. If there are no further questions, we will now conclude questions. Ladies and gentlemen, that concludes our discussion on the items of business. I'll now pause for a minute in order for you to finalize your votes prior to closing the voting system. Please ensure that you have cast your vote on all resolutions. Voting is now closed. I thank you for your attendance and participation at today's AGM. The final outcome of the polls will be declared by notice to the ASX later today and placed on the company's website. I now declare the Extraordinary General Meeting of Pact Group Holdings Limited closed. Thank you.