DOLPHIN Capital Investors is accused of parting away with shares worth €322 million instead of paying €42.7 million in cash as part of its arrangement to settle a put option right of Theodoros Aristodimou, founder and managing director of Aristo and Chairman of the Board of Directors of Bank of Cyprus.
Dolphin Capital, which is listed on London’s AIM market has called an EGM for April 24 in Nicosia to ratify a Board decision to settle the put option right of Aristodimou, by purchasing the 15% it did not already own in Dolphin Capital Investors Holdings Two Ltd, the intermediate holding firm of Aristo Developers Ltd, for €92.7 million.
The company, which is one of the largest land holders in Cyprus and Greece, said the acquisition follows the exercise of a 15-percent put option rights by Aristodimou.
Dolphin Capital now owns 100% in the unit.
Dolphin Capital said it would pay €50 million in cash and the balance of €42.7 million through the issue of 133.1 million shares in Dolphin Capital to Aristodimou or his companies, based on an issue price of 30 pence a share.
The company said the price is about a 30% discount to the value of Aristodimou’s holdings in Dolphin Capital Holding Two, based on its net asset value of €876 million on Dec. 31, 2008.
Dolphin Capital said Aristodimou’s holding in Dolphin Capital will now increase to 35.44% from 18.07% and the company also agreed on a call option with him to buy back the consideration shares six months after their issue.
Huge dilution
Athanasios Ktorides, acting as proxy for Lynchwood Nominees, holding 2 million shares in Dolphin Capital told the Financial Mirror during a press briefing that he opposes the decision of the Board to issue shares to Aristodimou.
“Dolphin Capital should pay the whole amount in cash, as per the original arrangement,” said Ktorides who insists that the 133.1 million share issue means giving away the value of €322 million in assets of the company to Aristodimou.
Ktorides makes particular reference to the fact that the audited results of Dolphin Capital, released in March 2009, show that the net book value of the company as at December 31, 2008 was 285p and the company had ample cash balances to pay its obligations.
“Just because the share price has been marked down to 30p on the AIM, where seldom there is any share trading, does not give justification to the Board to value the new issue at 30p a share, whereas the audited results show the true value at £2.85/share,” says Ktorides.
Minority shareholder rights
In a protest letter addressed to the Board, Ktorides says the intended action, which adversely affects the interests of all shareholders is being promoted in a hasty manner and without giving shareholders reasonable time to consider the appropriate actions.
Ktorides said he reserves his legal right to defend his and other shareholder interests and if necessary resort to legal action against the directors.
The fact that Aristodimou will increase his stake in Dophin Capital to 35% and together with other Board members will control about 42% of the company gives rise to concerns that Dolphin Capital may join a long list of companies who are considering to de-list from the AIM and other stock exchanges.
In 2007, Dolphin Capital paid a total of CYP 167.35 million or €285.93 million to wrest full control of the CSE-listed Aristo Developers and subsequently delist it from the Cyprus Stock Exchange, according to official announcements monitored by the Financial Mirror.
Through Aristo Developers, Dophin Capital owns the biggest coastline in Cyprus, plus golf courses and luxury resorts, most of which are located in the Paphos area. It also holds extensive property in Greece.
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