The row relates to a 2011 purchase by Spearpoint, which Brooks Macdonald acquired the following year, of convertible zero dividend preference shares issued by Origo. Brooks Macdonald now owns approximately £30 million worth of Origo preference shares.
Brooks Macdonald alleges the terms governing the preference shares do not reflect what was agreed in the placing letter ahead of the transaction. Origo denies this.
While Brooks Macdonald has not yet begun legal proceedings against Origo, it has not withdrawn its threat to take such action.
According to Origo, Brooks Macdonald is now exploring a second complaint against it through lawyers in the Isle of Man.
Origo said Brooks Macdonald is contesting the validity of a resolution creating the preference shares, on the grounds this had to be approved by 75% of all shareholders, rather than 75% of votes actually cast.
Origo noted Brooks Macdonald has not initiated formal legal proceedings on this front but had ‘refused the company’s direct request to withdraw’ the complaint. ‘In these circumstances, the company [Origo] proposes to act promptly to remove any possible doubt that its articles operate on any basis other than that on which the company and its shareholders have proceeded to date,’ Origo said.
To fight the latest complaint, Origo has now applied ‘on an expedited basis’ through the Isle of Man’s courts for a declaration affirming that the resolution was properly ratified.
Separately, Brooks Macdonald has sharply criticised Origo, citing ‘significant concerns regarding the corporate governance, performance, investment strategy and prospects’ of the private equity firm.
Brooks has proposed overhauling Origo’s board and committing its portfolio to ‘orderly realisation’. It said it was ‘disappointed’ Origo had ‘not engaged proactively’ on any of these matters. ‘In the circumstances, Brooks Macdonald reserves all of its rights and confirms that it will rigorously protect its clients’ interests,’ the company said in a statement.
Origo responded that it ‘remains committed to attempting to work with Brooks Macdonald to achieve a mutually acceptable resolution to both the first complaint and the second complaint’.
Origo’s £92 million portfolio is concentrated in the resources and cleantech sectors. In August 2013, the firm announced it would make no new investments but focus on realisations at ‘the right time and right value for shareholders’. Its share price has plunged by 83% over the past three years.