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Exclusive: Nanoco revolt – shareholders’ concerns and demands in full

nanoco

Earlier today Prolific North reported that North West tech firm Nanoco was facing revolt by a second group of shareholders, who hold just over five per cent of Nanoco’s shares between them.

The latest disquiet followed earlier demands for the board’s resignation from Tariq Hamoodi, who himself holds over four per cent of the company’s shares.

The fresh demands for leadership changes have come from Aurora Nominees and Securities Services Nominees, who represent shareholders with just over 16m shares, or around 5.02 per cent total stake in Nanoco, between them.

The demands came in a letter, dated June 26 and delivered via recorded delivery to company directors at Nanoco’s Runcorn HQ, as well as circulated among the company’s shareholders.

Nanoco has not yet made details of the letter public, however a copy has been seen by Prolific North and we can now reveal the requisitioning shareholders’ concerns and demands in full.

The letter began by explaining that the shareholders involved have serious doubts about the company’s corporate governance: “In summary, we believe that Nanoco has considerable potential but is suffering from serious corporate governance issues,” it said.

It went on to demand the removal and replacement of at least six key board members, including the chairman, chief executive, chief financial officer and chief technology officer, along with nominating replacements: “There are serious questions about board independence and competence which the Company has failed to adequately address. A change in the board’s composition is necessary to ensure that all shareholders are treated fairly, that the Company maximises licensing and litigation revenue from its intellectual property portfolio, and that commercialisation of the Company’s quantum dot products is reached in short order,” the letter continued.

The letter then went on to fully detail shareholders’ principal concerns including the following, in summary:
 

  • The Board is not independent and has failed to deliver for “all but a select group of shareholders.”
     
  • The Company’s organic business is performing poorly, still without any profit over its entire 22+ year history. Its share price is down over 50% since current CEO Brian Tenner took over, whilst his compensation is up more than 50%. Other executive and non-executive directors’ pay have also seen drastic rises, with a spokesman adding that, collectively, the directors and officers were paid 43% of revenues last year.
     
  • In June the Company announced further delays to reach cashflow break-even (now guided to 2025 from 2024). The Company may have tried to “downplay” news of this delay by including it in the press release regarding the return of capital to shareholders.
     
  • The requisitioning shareholders believe a change in the board’s composition is necessary to ensure that all shareholders are treated fairly, that the Company maximises licensing and litigation revenue from its intellectual property portfolio, and that commercialisation of the Company’s quantum dot products is reached in short order.
     
  • The requisitioning shareholders have identified best class executives and independent directors through a search process involving several independent consultants and engagement with shareholder governance advisors. These candidates have experience across quantum dots product development and marketing, intellectual property licensing and litigation, product development, and capital markets.

A spokesman for the requisitioning shareholders also reiterated concerns previously expressed by Hamoodi regarding major shareholder the Swiss bank Lombard Odier Asset Management, and former majority shareholder Richard Griffiths’s roles in the recent Samsung litigation.

The letter concluded by directing readers to the presentation, Transforming Nanoco, which has already been made available to shareholders and directors online by Hamoodi – “one of Nanoco’s largest shareholders and a requisitioning shareholder” – in which he has laid out several questions for Nanoco’s board, all of which, the letter said, have not yet been responded to.

The requisitioning shareholders added that they will host a webcast on July 25 at 14:00 to “introduce themselves to Nanoco shareholders and answer questions.”

Nanoco chair Christopher Richards said in response to the latest calls for boardroom change: “We continue to emphatically reject Mr Hamoodi’s proposals to change the entirety of the board at such a key point in Nanoco’s evolution.

“The board welcomes scrutiny but his selective interpretation of the past, significant factual errors, and speculative concerns take a number of events out of context to create a misleading narrative.

“The proposed board changes are not in the best interests of the company or its shareholders. Nanoco is at an exciting inflection point, with the litigation proceeds fully underpinning our organic business which has significant growth opportunities, as well as offering an attractive potential return of capital to shareholders.”

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