Bellamy's largest shareholder wants to gut the board

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Bellamy’s, whose shares are in suspension while the company works out the extent of the damage to sales of its organic infant formula after regulation changes in China, just copped another blow.

Singapore-based Black Prince Private Foundation, the largest shareholder in the troubled Tasmanian company, has moved to axe four of the company’s six directors.

This would effectively get rid of all the directors other than the chairperson and chief executive Laura McBain.

Bellamy’s says it’s received a notice from Black Prince Private Foundation, which owns 14.48% of shares, for a general meeting to be held by the end of February. The foundation wants to remove independent directors Patria Mann, Launa Inman, Michael Wadley and Charles Sitch.

In their place, it wants four new non-executive directors: Jan Cameron, Chan Wai-Chan, Vaughan Webber and Rodd Peters. Peters is an authorised representative of the foundation.

The chairman of Bellamy’s, Rob Woolley, says the proposal isn’t in the best interests of all shareholders.

“I support my fellow directors in opposing the proposal from Black Prince, which is an unwanted distraction for the Board and senior management as we work towards lifting the suspension of trading in Bellamy’s shares.”

Bellamy’s shares have halved to $6.68 since it raised sales concerns about four weeks ago.

The company went into a trading halt while it worked out a more detailed report to the market, and then went into a voluntary suspension which is due to run out later this month. The key reason given for the suspension is so that the firm can continue “negotiations with key supplier/ manufacturers”.

Analysts believe that Bellamy’s infant formula is being pushed into the background in a wave of discounting in China brought about by regulatory changes.

The key question is: How long will this discounting, sparked by a change in regulations requiring formula makers to be registered, last?

At last report, the company expects first half revenue to be about $120 million but the second six months could be flat if this sales blockage isn’t cleared. This would put full year revenue at $240 million, well below analyst expectations of about $330 million.

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