Whitehaven Coal says activist investor Bell Rock Capital Management has privately boasted of controlling more than double the shareholding it has publicly disclosed, and the miner asked the Takeovers Panel to help clarify whether the hedge fund “misled” other investors.
But the Takeovers Panel said it would not disqualify Bell Rock’s votes from being counted at the company’s annual meeting on Thursday, as requested by Whitehaven in an escalation of tensions between the two parties.
Bell Rock has lobbied Whitehaven to abandon plans to spend billions buying two BHP coking coal mines and instead return its $2.45 billion cash pile to shareholders. The pressure did not change Whitehaven’s course, with managing director Paul Flynn agreeing last week to pay up to $US4.1 billion ($6.4 billion) to acquire the Daunia and Blackwater mines in Queensland.
The tensions have spilled over into a proxy battle over executive pay, with Bell Rock urging Whitehaven shareholders to vote against a remuneration structure that would reward Mr Flynn for achieving unstated strategic goals, which are understood to include the acquisition of Daunia and Blackwater.
The remuneration vote will occur on Thursday morning in Sydney.
Whitehaven made a spectacular, 11-hour counterattack on Bell Rock on Wednesday when it urged the Takeovers Panel to clarify exactly how many shares in the company were controlled by the London hedge fund.
Whitehaven pointed the panel to a letter Bell Rock sent to shareholders on October 12, in which it claimed to be managing just under 5 per cent of Whitehaven shares. The company said the 5 per cent claim was at odds with what Bell Rock had communicated to the miner behind closed doors.
“At various times since May 2023, Bell Rock has represented to Whitehaven that it holds a combined physical and derivative interest in Whitehaven shares of approximately 11 per cent,” the company wrote in a submission to the Takeovers Panel.
The comments appear to suggest Bell Rock’s exposure to Whitehaven may be held through both ordinary shares with voting rights, but also through other arrangements that could give Bell Rock voting rights linked to shares that it does not ultimately own.
Hedge funds sometimes pay a fee to acquire the dividend and voting rights linked to shares that are owned by a second investor, based on the belief they will recoup more than the fee in dividends.
Bell Rock declined to comment. The Australian Financial Review does not suggest that Bell Rock has employed such an arrangement.
“Whitehaven seeks interim orders that (in summary) Bell Rock discloses the derivative interest it holds in Whitehaven shares and that unless such disclosure is made, the votes cast on the Whitehaven shares in which Bell Rock has a relevant interest be disregarded at [the] annual general meeting,” the submission reads.
The Takeovers Panel made no comment on the merits of the claim. “A sitting panel has not been appointed at this stage and no decision has been made whether to conduct proceedings,” it said in a statement.
Glass Lewis and Ownership Matters, two influential proxy advisory firms, have recommended that Whitehaven shareholders vote in favour of the remuneration structure on Thursday.
Institutional Shareholder Services told Whitehaven shareholders to reject the remuneration structure.
