- Blue Sky’s Managing Director, Robert Shand, has resigned to allow the funds manager to rebuild “market confidence”.
- The company is also revamping its board of directors, a further move to dampen the impact of a research note from a short seller.
- Kim Morison, the interim head of the funds manager, says he is committed to ensuring Blue Sky “strengthens its governance and transparency”.
Robert Shand has resigned as Managing Director of Blue Sky Alternative Investments, the funds manager hit by a research note from a US-based short seller.
He said: “It is time for a renewed board and management to take Blue Sky forward, build on the strong fundamentals and prepare the business for the next phase.”
He will receive his contractual entitlements but will forgo 1.3 million options previously allocated to him.
Kim Morison, the Managing Director of Blue Sky Water Partners and Head of Blue Sky’s Real Assets, becomes interim head of Blue Sky. He is a current executive director of Blue Sky.
He says he will focus on rebuilding market confidence in Blue Sky’s investment businesses, on delivering returns for shareholders and fund investors, and acting on the Board’s commitment to greater transparency.
John Kain, Blue Sky Chairman, said: “In offering his resignation, Robert (Shand) agreed that as Blue Sky rebuilds market confidence, it was in the best interests of the company, its shareholders and its investors for Kim take over as interim Managing Director.”
Blue Sky shares are down by two-thirds after Glaucus Research announced it was shorting Blue Sky, alleging the funds manager wrongly calculated the value of assets under management and charged exorbitant fees.
Blue Sky rejected the allegations and referred the Glaucus note to the corporate regulator ASIC, saying this could be a case of market manipulation.
At the close, Blue Sky shares were down 10.4% to $3.10.
The company today also announced that executive directors Elaine Stead and Nicholas Dignam will step down from the Board. They both will continue in their executive roles in the business.
The Blue Sky Board now comprises Kain as independent chairman, Michael Gordon and Phil Hennessy as independent non-executive directors, Morison, as well as executive directors, Tim Wilson and Alex McNab.
Kim Morison, the interim Managing Director, says Blue Sky’s business fundamentals are strong.
“We have learnt, and we are continuing to learn, from our recent experiences and we are building for the future,” he says.
“We have a great platform, great people and continuing support amongst our funds investors and institutional clients.
“Blue Sky will accelerate initiatives to recalibrate Blue Sky’s income mix toward a greater reliance on recurring cash income. We will also continue to develop new investment opportunities and we are well placed to do so given the strength of our balance sheet.
“Our focus will always remain on generating the best possible returns for our fund investors. By delivering these returns we will earn the right to grow our assets under management, our revenues and ultimately our returns to shareholders.
“I’m committed to ensuring Blue Sky strengthens its governance and transparency to our shareholders and investors in order to restore and build confidence among all of our stakeholders.
“In conjunction with the Board and building on the experience in our Real Assets division, I will be ensuring that across the business we have the appropriate skills, processes, and reporting and governance structures to continue to strengthen our institutional grade investment management business.”
Morison previously held senior management roles with CSR Sugar, Macquarie Bank’s Agricultural Commodities Group, Twynam Agricultural Group, and Colly Cotton Limited.
As interim managing director, he will be paid a base salary of $400,000 plus a director fee of $77,500.
Late last month Blue Sky went into a trading halt after the California-based Glaucus Research disclosed it was short the fund manager, arguing it had been “significantly overstating” its fee earning assets.
“We believe Blue Sky $BLA compensates for its overstated fee earning AUM (assets under management) by charging clients egregious management fees,” said Glaucus in a series of tweets today.
“Based on our analysis, we estimate that $BLA Blue Sky’s real fee earning AUM is at most $1.5 billion, 63% less than Blue Sky’s reported figure.
Blue Sky issued a statement later says there were a large number of “factual inaccuracies” in the Glaucus note.
Shares in Blue Sky went into voluntary suspension while the ASX reviewed its response to the research note.
The fund manager then provided a detailed analysis of asset exits over the last five years and announced it would separately report one-off upfront management fees and ongoing annual management fees in all future annual reports.
However, Glaucus said Blue Sky’s response to its research note was “woefully inadequate”.
And last week Blue Sky downgraded its full year underlying profit guidance to $20 million to $25 million from $34 million to $36 million
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