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

Thank you for standing by, and welcome to the Pact Group Extraordinary General Meeting. I would now like to hand the conference over to Mr. Raphael Geminder, Executive Chair. Please go ahead.

Ladies and gentlemen, welcome to the 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'd like to welcome everyone attending. A recording of the proceedings of the meeting will be made available on the company's website. The notice of meeting was sent to shareholders and the ASX on the 12th of May 2025, 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 Michael Wachtel, Carmen Chua, 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. Christina Piccolo of Computershare, the company's share register, is also with us today and will be acting as our returning officer. There is one item of business to be considered at today's meeting. There is no voting exclusion applicable to the resolution. 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. In order to provide you with enough time to vote, I will shortly open voting. The final results of the poll will be available later today on the ASX and Pact website. 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 the resolution 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 the questions will be addressed after the formal items of business. Questions should be addressed to me and through me as Chair. [Operator Instructions] These instructions are also available in the online meeting guide. You can submit questions from now until the end of the meeting. For 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 via 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 +61-3-9415-4024. I now declare voting open. Please submit your votes at any time during the meeting. I will give you a warning before I move to close voting. I am holding proxies in my capacity as Chair, and it is my intention to vote all such proxies in favor of the resolution. 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 these proxies as directed. I have a relevant interest in 88% of the company's issued share capital and intend to vote in favor of the resolution. I will now move to the item of business to be considered at this meeting. This resolution is for the proposed removal of the company from the official list of the ASX. Delisting means that the company's shares will no longer be quoted on or able to be traded on the ASX. Further information regarding the reasons for the proposed delisting and the consequences of delisting are set out in the explanatory memorandum to the notice of EGM. I will now put the resolution to the meeting, that for the purposes of ASX Listing Rule 17.11 and for all other purposes, shareholders approve the removal of Pact Group Holdings Limited from the official list of the Australian Securities Exchange. Please record your vote online if you have not already done so. Valid proxies 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 prior to the meeting. Written questions will be read out by our EGM moderator, Carolyn Ireland, General Manager of Investor Relations, Treasury and Transformation. Carolyn?

Thank you, Chair. If you don't mind, I'll read questions exactly as they are submitted. The first pre-question we received, Chair. We have received a question prior to meeting from East [ Wind ] Investments Proprietary Limited. Why when the takeover failed, are you still pursuing to make PGH a private company? I urge the directors to do what they are being paid for and run the company as it should be run and not take the easy option of putting PGH in private ownership. Shame on the directors for not doing more. When I bought PGH, it was a successful company, and look at it now, a basket case, not happy with the directors. That was a direct quote. Thank you, Chair.

Thank you. So the reason for delisting as well as the advantages and disadvantages are set out in detail in the notice of meeting. The Board considers that it is in the best interest of the company and its shareholders as a whole for Pact to be removed from the official list for the reasons set out in the notice of meeting. The Board considers that the listing is no longer justified, and it causes a lot of distraction, not only for the directors, but also for many of the company's 5,500 employees. Delisting will simplify our operations and allow everyone at the company to focus on business performance. The Board unanimously recommends to shareholders that they vote in favor of the proposed resolution. The directors of the company, myself included, are aware of our obligations to the company as directors, including to act in its best interests at all times, the directors of the company have discharged their duties diligently and in compliance with all laws and ASX requirements. The delisting proposed complies with ASX listing rules, the Corporation Act and ASX guidance. Specifically, the conditions that need to be met in connection with the delisting are shareholder approval by way of special resolution of the company's shareholders. This approval is being sought at this EGM. The inclusion of the information contained in the notice of meeting for this EGM that delisting occur no later than 1 month after shareholder approval to the delisting. That the company apply for suspension of its shares at least 2 days prior to the delisting and that the company release the full terms of ASX's in-principle advice when making a formal application to ASX for the delisting, which the company did in its ASX announcement dated the 29th of April 2025. These conditions align with the standard conditions that ASX applies when a listed entity requests to be removed from the official list as set out in ASX Guidance Note 33. So just to clarify, post delisting, Pact will be an unlisted public company. It will not be a private company. Post delisting, Pact will continue to have governance and risk management structures in place that reflect the company's values and strategic objectives that are compliant with law. Although the ASX listing rules will no longer apply, the directors will continue to be bound by their obligations to the company, including to act in the company's best interests. We will continue to seek to drive improvements in company performance. Carolyn, are there any other written questions?

Yes, Chair. The next one, we have received a question prior to the meeting from Jeremy Dawson on behalf of [indiscernible] Dawson. How is it supposed that delisting will result in share registry cost savings? Thanks, Chair.

Okay. Yes, I understand. Thank you for that question. Well, if the company is delisted, the company has estimated that it will achieve an annual cost savings of at least $1.57 million, covering ASX listing and associated fees, audit and insurance cost savings, share registry cost savings, AGM and yearly and half yearly results cost savings and any other share registry savings, ASIC fee savings and savings due to reduced headcount and salaries in company secretarial, finance and related roles. Around 50% of the estimated savings arise through audit and insurance cost savings and ASX fee savings. The rest of the savings arise from the various other less material cost savings, including related to the share registry, Computershare cost savings will arise from certain costs no longer being incurred post delisting, for example, there will be no CHESS transactions. ASX external audit letters will no longer be required and similar. So Carolyn, with that, I will now take questions from shareholders joining us today, starting with questions received in writing from the online platform.

Chair, we have received a number of questions online. And as previously, I'll read them out just as they're written. The first question comes from Mr. [ Stephen Mayne. ] The latest addition of the AFR's Rich List came out 2 weeks ago and claimed our controlling shareholder is worth $1.69 billion. Is this accurate? And if so, why doesn't our Executive Chair make a generous offer to minorities to privatize the company rather than pursue this hostile delisting proposal? He can easily afford to offer more than $1 a share. Is he embarrassed after taking $649 million from the public investors when he floated Pact in 2013 at $3.80 per share. That's the end of the question, Chair.

Thank you, Carolyn. And Stephen, thank you for the question. I will remind Stephen that the purpose of today's meeting, it's very clear. The purpose of today's EGM is specifically related to the removal of Pact Group Holdings Limited from the official list of the Australian Stock Exchange, and that is what we are here to talk about today. Carolyn, next question.

Thank you, Chair. Another question from Stephen Mayne. Australia is currently in the midst of an unprecedented deluge of takeovers that has contributed to listed entities on the ASX dropping in 27 of the past 28 months for a net reduction of 216 or 9.4% to 2,078 on May 31, 2025. There were a record 29 major takeovers above $200 million completed in calendar 2024. The ASX is losing many long-standing names such as CSR, Boral, Crown, Blackmores and Newcrest, but few of them are going like this with a hostile delisting proposal. Could the Executive Chair comment on why the public markets are not valuing ASX-listed companies like ours more highly? And does he have any messages for ASIC and ASX about how public company life can be made more attractive? That's the end of the question, Chair.

Thank you, Stephen, once again for that question. Obviously, it's not my role once again to speculate on matters affecting other companies. We are here today simply to do one thing, to talk about the removal of Pact Group Holdings from the official list of the Australian Securities Exchange. Any other questions? Any other written questions, Kathryn (sic) [ Carolyn ]?

Thank you, Chair. Yes, there are. Mr. [ William Ewen ] has a range of questions. Again, I'll read them out as they're written. In the latest ASX announcement, Chair Raphael Geminder said he acquired 309,963 shares via Bennamon Industries, and there's a date range there. But the Pact register as of 29 May 2025 shows only 281,466 shares. Where are the missing 28,497 shares? And should Chair Geminder clarify this with the ASX? That's part one. Would you like to answer that first, Chair, or would you like me to continue with the second question?

I'd like the entire question, if that's okay, and then I'll process them separately.

Sure. The next part, during the last takeover bid, Mr. Michael Wachtel, as a Director of Pact and the Interim Chairman, if Mr. Geminder is unable to chair a meeting, publicly supported the offer price of $0.84 per share, encouraging shareholders to accept the bid from Director, Raphael Geminder. Given that the bid ultimately did not reach the 90% compulsory acquisition threshold, some shareholders may now question whether that recommendation serves the broader interest of all shareholders. How does Mr. Wachtel intend to assure shareholders of his ongoing commitment to impartiality and to acting in the best interest of all stakeholders? Thank you, Chair. We'll start with the first one...

Yes. Thank you, William. So the question relating to the missing shares. So the missing shares have now been processed by Computershare, and they relate to a private transfer of shares. So perhaps Mr. Wachtel would like to answer question #2. Michael, can I pass that to you?

Yes. Thank you, Chair, and thank you, William. Like the Chair, I don't propose to re-litigate the previous takeover attempt. But as you well know, William, the great majority of shareholders clearly accepted the $0.84. And in fact, if it were not for some unique circumstances where some associated shareholders made very substantial block purchases, the amount of percentage Kin would end up with would be well over 90%. But today isn't about that. So I'd rather answer your other question. Every step that both I and the IBC and the independent directors have taken since the original launch of the Kin takeover back in September '23, we've ensured we've taken legal advice not only on every step that we've taken, but even in terms of every communication with shareholders. We chose to use one of the top M&A lawyers in Australia. In fact, he wrote the book on M&A. And so we're pretty comfortable that we've complied with the aspect of our fiduciary duties. We will continue to do that, and I will continue to take that same subject legal advice to ensure I meet the expectation and my colleague, Carmen, will take the same approach with me acting, I suppose, at the forefront being located in Australia.

Thank you, Michael. Okay. Do we have any further written questions?

Chair, we have three more questions from Mr. William Ewen. First of which, what specific changes will apply to corporate disclosures if the company is delisted? For example, if Pact intends to sell assets, acquire other businesses or enter into transactions such as rent increases that may benefit related parties, how will shareholders be able to access and track this information? That's one -- sorry, a related party. Two is if the company is delisted, will Pact commit to publishing material announcements such as significant transactions or changes in operations, clearly on its website and also distributing them directly via e-mail to remaining shareholders? So the second one is around announcements. And the third of those questions, given that the EGM material suggests there may be reduced responsibilities and risk for directors following delisting, is it expected that their remuneration will be adjusted accordingly? Additionally, how will shareholders be able to access detailed information regarding directors' remuneration packages, meeting attendance and the scope of their contributions? So the three questions. Back to you, Chair.

Thank you. Thanks, William. Thank you. Yes, thank you for those questions. I might actually ask Kathryn de Bont to talk to the specific legal obligations of the company post delisting, but I'd make a general comment, and that is that we will comply with all the ASX guidelines and laws related to delisting, and we will give shareholders whatever is required according to those laws. Kathryn, do you want to embellish on that?

Thank you, Chair. In relation to questions three -- the first and second questions about disclosures on the website and material announcements. This matter is dealt within the notice of meeting. Material announcements, disclosures and results will be released via Pact's website and to the extent required by law, will be lodged with ASIC and published.

Chair, that leaves the question regarding remuneration.

So can you just run that question by me one more time?

Certainly. Given that the EGM materials suggests there may be reduced responsibilities and risk for directors following delisting, is it expected that their remuneration will be adjusted accordingly? And similar question for the remainder?

Yes. I mean there is no resolution before the Board regarding directors' fees. And so at this stage, that's not been something that we've paid attention to. And so that's really not what we are here to talk about today. Okay. Can we move on? Any further written questions?

Yes, we have a number of further questions. This is the third from Stephen Mayne. How many shareholders have voted? And what sort of proxy voting solicitation campaign did we run?

Thank you. Thanks for that question, Stephen. Around 115 shareholders voted prior to the meeting, and we did not run a proxy solicitation campaign. Thank you.

Thank you, Chair. And the next question, again from Stephen Mayne. Why didn't we release the proxy position and formal addresses to the ASX before the meeting started, which is best practice? Also, why is the Chair reading scripted responses to pre-EGM meetings rather than dealing with the issues in a formal address? I missed the proxies when they were flashed up. Could you please read them out?

So can I ask the team to read out the proxies. I'm not quite sure what -- whether this is a question or a statement, Stephen, I'll take it as a statement. So thank you for your statement. And if you missed the proxies when they were flashed up, can the team please read those out?

I'm happy to read out the proxy position, Chair. So for, 90.73%; against, 9.24%; and valid undirected proxies, 0.03%.

Thank you. Further questions?

Chair, we have a question from Mr. [ Jeremy Matchett ]. It's Jeremy Matchett here, a retail shareholder of Pact Group. I had a couple of questions for the Board, and then he goes on to list three questions. First of which, will shareholders be proactively informed of material updates outside of the standard ASIC filings? Will we receive e-mails regarding company updates, so we don't have to regularly check ASIC? Chair, I note that we have answered that question already, but I'll leave that with you. Second, will there be an opportunity outside of AGM EGMs to request information from the company as part of the Investor Relations management as a delisted company entity? And the third, will there be a disclosure surrounding interrelated entities given the potential for conflict between Pro-Pac, Visy, Kin Group and property leases? They are the three questions. Thank you, Chair.

Thanks, Jeremy. I believe most of those questions have already been answered. So maybe we'll move on to the next set of questions.

We have a question from Mr. [ Richard Wilkins. ] Will Pact facilitate a private market of its shares post delisting? The ability to trade their shares in some way post delisting is of paramount importance to Pact's minority shareholders. Thank you, Chair.

Yes, that's a really good question. Thanks, Richard. Look, shareholders who wish to sell their shares will be able to do so on market prior to the company's suspension from trading on the 14th of July. There is more than a month from the date of this EGM, which gives shareholders an adequate opportunity to exit their investment if they wish to do so. If the delisting conditions are satisfied, the delisting is likely to take effect on the 16th of July at the ASX's close of trading. So if you want to sell your shares after the delisting, you'll need to find a buyer for your shares. You'll also need to comply with the formalities in the company's constitution, which requires a written transfer in any usual form, such as a share transfer form. And that transfer or sell agreement needs to be sent to our registered office to register the sale. So while the company does not currently intend to offer a trading facility for shareholders post delisting, the company may explore the advantages and disadvantages of offering such a facility or mechanism. However, we cannot guarantee this will be feasible due to legal restrictions and costs. I hope that answers your question appropriately. Carolyn, further questions?

Thank you, Chair. There is a question from Stephen Mayne, which is his fifth question. Are any of the directors concerned that more than 95% of the minority shareholders have been voted against this -- have been voted against this proposal? And could the Executive Chair please summarize what happened at the takeovers panel, where our 2 largest minority shareholders attempted to block this proposal. Does he agree that minority shareholders overwhelmingly do not support this proposal? Thank you, Chair.

Thank you. Thanks for that question, Stephen. Look, I'm not going to speculate in any way. What I would say, there are several questions in this question. So maybe I'll try and break them down. So in terms of minority shareholders voting against the proposal, and that's kind of one question, summarizing what happened at the takeovers panel is another question. And then a question around do I agree that minority shareholders do not support or overwhelmingly do not support this proposal. I think statistically, you saw flash up the results of this meeting. I don't agree that all minority shareholders don't support the proposal. I think that the share register is constructed in a way where, in fact, 3 or 4 shareholders pretty much make up the vast majority of the vote. And so I don't think it's the vast majority of shareholders. I think there are a handful of shareholders that don't support this proposal. Am I concerned or are the directors concerned about the shape of the vote? I don't think -- I think the answer is clearly no. In terms of summarizing what occurred at the takeovers panel, I think that, that was adequately summarized in the takeovers panel response to the various applicants claims. And I think you can just go online and refer to those questions in your own time, Stephen. Okay. Carolyn, any further questions?

At this stage, we have no further questions submitted -- written questions submitted. I'll just confirm that. Yes, Company Secretary have agreed. That is the last of our written questions. Thank you, Chair.

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

There are no phone questions at this time.

Thank you. We will now conclude questions. Ladies and gentlemen, that concludes our discussion on the items of business. I will 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 votes on all resolutions. [Voting]

Voting is now closed. I thank you for your attendance and participation at today's EGM. The final outcome of the poll 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.