Candid Cregan says pulling One51 IPO could be considered a failure
One51's inability to persuade enough shareholders to back its plans for a stock market listing could be considered a failure, the company's chairman Denis Cregan has said.
Cregan gave a lengthy and candid explanation of the negotiations that scuppered the plan at a shareholder meeting earlier this week, even going so far as to outline reasons why the company might be discomforted by the prospect of borrowing money to grow.
Some shareholders have urged the company to leverage further, rather than raise equity, believing that this is the best way to maximise shareholder value.
Cregan did not name the shareholders concerned, but Dermot Desmond's International Investment & Underwriting, the company's biggest shareholder, is understood to have been opposed to the IPO plan. Cregan said that based on the discussions the company had with shareholders, around 35pc of the votes would have gone against the resolution to approve the IPO, with 75pc approval needed for the resolution to pass.
"I suppose some of us have to get ourselves around to the way of thinking that with the amount of funding that's available and generally out there, the priority is - some people would say - to protect your equity and leverage (instead)," Cregan said.
"I'm not so sure we're mentally at that stage yet, because I remember years back, we were distressed sellers of a lot of assets. These are the problems of over-leveraging. That's why there's a reticence. That's why the leveraged route wouldn't have been the first option.
"I suppose as an organisation, and I'm only in this organisation a very short time, but leveraging in this organisation is probably the least favourable mode essentially because of the culture in this company; it has spent many years being over-leveraged.
"I think there's a serious reticence, obviously with that culture going back, that one doesn't want to get into an over-leveraged situation and consequently there are viewpoints that the issuing of equity is the way to solve that problem.
"And other people have other views on that, which is equally understandable. I suppose you could say it's a failure that we didn't convince them to our way of thinking.
"It's a discussion and a debate about process and it's a discussion and a debate of how we achieve the same ends,
"It's not a negative situation, I'd stress, it's a debate and emphasis on how we fund the future growth of the business.
"And indeed, standing back far enough from it, one would say there's merit in the debate about the cost of equity versus the cost of loan capital.
"I'd like to emphasise that all discussions with the various people involved were constructive and essentially it's about maximising shareholder value in the medium term."
The company has up to €100m available to pursue acquisitions, even without the IPO and is looking at three to four potential targets, chief executive Alan Walsh said.
He said there were "probably one or two bigger opportunities that (One51) potentially could have unlocked" if the plan had gone ahead.
Sunday Indo Business