Bolton further dilutes Wilson's stake in Yowie

Corporate raider Nicholas Bolton's Australian Style Investments is pulling out all stops to stall and diminish the likelihood of a board spill at embattled confectionery company Yowie Group (ASX: YOW), where it may not have a majority of shares but retains control of the directorship and executive.

Geoff Wilson's WAM Active (ASX: WAA) is attempting to take the reins of Yowie via the investment vehicle Keybridge (ASX: KBC), where in tandem with media mogul Anthony Catalano he wrested control from Bolton in April - a move that was validated by a Supreme Court ruling that Bolton unsuccessfully appealed.

While Bolton-led Yowie tries to stage a takeover of Keybridge, the latter has utilised its majority shareholding in the former to call an extraordinary general meeting (EGM) to overhaul the Yowie board completely.

Keybridge's resolutions offer shareholders the chance to vote on whether to remove the existing Yowie board and replace it with WAM's nominees Jesse Hamilton, Martyn McCathie, Sulieman Ravell, Wilson and Catalano.

Bolton's board has used the channels at its disposal to try to block the meeting from taking place, and earlier this week - still casting doubt around whether such a meeting is even valid - postponed the EGM by two weeks to 14 July.

In its reasons for the postponement, which Yowie's board clarified wasn't necessary under the constitution, it made the claim that matters before the Takeovers Panel "must be resolved prior to the holding of the meeting".

The company also revealed it had been "made aware" that "a Keybridge shareholder, holding more than 5 per cent of Keybridge" had also issued a notice seeking the removal of all Keybridge directors.

Last year's annual report filed by Keybridge shows there are only three shareholder groups that meet the criteria of having more than a 5 per cent holding - Wilson's, Catalano's, and Bolton's.

As part of the takeover bid Yowie issued 34 million new shares, drawing Keybridge's wrath as this cut its voting power in Yowie from 66.78 per cent to 58.07 per cent, with the majority shareholder contesting the share issuance in an application to the Takeovers Panel.

It has been revealed today that entities associated with Australian Style have taken further steps to dilute Keybridge's voting power, prompting the latter to file yet another complaint to the Takeovers Panel.

An unlisted management investment scheme called HHY has long been in Keybridge's portfolio of assets, and directly controls approximately 10.06 per cent of Yowie shares.

Much to the chagrin of Wilson however, the responsible entity for the fund is Aurora Funds Management Limited, which is connected to Bolton and his Australian Style colleague John Patton, the executive chairman of Yowie.

Wilson Asset Management Group's application to the Takeovers Panel alleges that Aurora - without notice of a capital raising and prior to Wilson receiving access to the HHY members’ register - issued 42 per cent worth of new units in the unlisted fund.

The shares were purportedly issued to Yowie directors and their associated entities, significantly diluting its voting power with Keybridge's voting power in HHY cut from 31.15 per cent to 21.89 per cent, and Wilson's voting power declining from 31.98 per cent to 22.48 per cent.

This manoeuvre, if allowed to stand by the panel should it decide to take action, would therefore only reduce Wilson's voting power in Yowie by around one percentage point.

But Wilson is not prepared to watch idly by. Keybridge submits the dilution of HHY unitholders is "for the improper purpose of preventing a change of responsible entity”, and that the acquisition of control over Yowie shares is not taking place in an efficient, competitive and informed market.

The submission claims that "some or all of Yowie's own directors subject of removal resolutions" at the EGM are seeking to influence the composition of Yowie’s board to control or influence the conduct of Yowie, by causing HHY to issue additional units and participating in that dilutionary issue themselves.

Keybridge has sought orders that Bolton, Yowie executive director Nicholas Ranger and their associates be prevented from acquiring any additional interests in HHY until further orders from the panel, and that they lodge substantial holding notices disclosing their combined voting power, relevant interests, and associations in Yowie.

The company is also seeking orders that Aurora disclose details of the issue of any HHY units since 31 December 2023.

Since assuming executive roles at Yowie in May last year, Nicholas Bolton and John Patton have been on base salaries of US$522,000 and US$250,000 respectively.