Kelso urges The Works shareholders to defy board and elect Coulthard

Alliance News) - Kelso Group Holdings PLC on Friday issued a statement encouraging TheWorks.co.uk PLC shareholders to appoint Graeme Coulthard as a director, despite the board's opposition.

Kelso shares were untraded at 3.50 pence on Friday in London. TheWorks.co.uk shares were 5.2% lower at 83.45p each.

The London-based investor in UK listed companies had, earlier this month, requested that a resolution to appoint Graeme Coulthard to The Works' board be considered at its annual general meeting on September 7.

Kelso holds a 10% stake in The Works, a Birmingham, England-based seller of books, stationery and toys, while former Card Factory director Coulthard holds 8%.

The Works on Thursday said it had written to Kelso expressing its opposition to the proposed appointment, but Kelso "subsequently confirmed that it remained intent on proceeding with the resolution." The former stated that its board "firmly and unanimously believes" that appointing Coulthard would not be in shareholders' best interests.

Among the reasons for its opposition, The Works said that Coulthard "has limited experience as a director of a listed company and no executive experience in multi-site value retail operations."

It added that his appointment would be as a non-independent director, meaning that independent non-executives would no longer make up a board majority. And the current directors, The Works said, already bring "a strong balance of skills, experience and independence".

"The proposed appointment would...create unnecessary distraction, risk derailing delivery of the group's focused growth strategy, create an imbalance in governance and potentially result in particular shareholder interests being prioritised over those of the broader shareholder base, with a consequent risk of value destruction," The Works stated.

In its statement on Friday, Kelso encouraged shareholders to vote for the resolution, and said it was "surprised and disappointed by the strength of [The Works'] response".

Kelso noted that Coulthard has been a major shareholder at The Works since August, 2022, "longer than any current non-executive director has served on the board."

It added that The Works' assertion regarding his executive experience "is misleading and reflects poorly on the independent directors."

"Mr Coulthard joined the board of Card Factory in 2010 when he acquired the business for Charterhouse Capital Partners and served for five years through a period of rapid store roll-out, strong profit growth and a successful flotation in 2014...[and he] remained as a director for a year after flotation," Kelso said. "That is direct experience of...the segment in which The Works operates, and the business in which Gavin Peck, The Works' chief executive, built his career.

"Kelso values that experience in Mr Coulthard as it does in Mr Peck."

The firm continued: "The idea as set out in the board's baseless comment that Mr Coulthard will undermine value creation rather than enhance it, in Kelso's view, is simply absurd.

"Mr Coulthard...would act in the interests of all shareholders and...If board balance is the concern, the solution lies within the board's control. It can appoint a further independent non-executive director, as it has twice done in the past year.

"The election of one additional director to a board of five, supported by shareholders holding some 18% of the register, is a modest and reasonable request."

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