DRUMMONDVILLE, Que. – The second-largest shareholder of CVTech Group Inc. will be looking for answers at the company’s annual meeting on Tuesday about why a recent takeover offer was twice turned down.
Guy Aubert said shareholders need to be told why a second, higher offer of $1.95 per share by a leading NYSE-listed electrical contractor was rebuffed by CVTech.
“Why weren’t shareholders consulted,” Aubert asked.
“It wasn’t an offer for $1.25 a share to sell the company at a discount,” he said Monday.
Aubert reiterated there needs to be a change of leadership at the top of the company and a new board due to a decline in the company’s market value since 2005.
At that time, Aubert received shares as partial payment for his ownership of a company that’s now a major part of CVTech’s business, providing a variety of services to the electric power industry.
Gestion G. Aubert, owned by Aubert, is CVTech’s second-largest shareholder with a 14 per cent stake in the company.
Aubert also was chief operating officer of CVTech until his retirement from that position in 2010. He resigned from CVTech’s board in January.
“It’s still a good company, but it’s the upper management that isn’t good,” he said, calling the board an “old boy’s club.”
“We’ve lost the confidence of investors. The CEO needs to do road shows to sell the company to institutional investors and to potential investors. That isn’t being done.”
The stock closed down eight cents or about five per cent at $1.40 on the Toronto Stock Exchange after rocketing higher by more than 20 per cent on Friday due to a public letter from Aubert.
CVTech (TSX:CVT) has accused Aubert of disclosing confidential information about the takeover offers in a letter last Friday and said some of the information was “erroneous and incomplete.”
CVTech has said after receiving an initial conditional and non-binding offer in December 2011, it told the U.S. bidder that it would initiate a process to solicit competing offers. The U.S. company then withdrew its offer.
Ahead of the annual meeting, CVTech said Monday that its subsidiaries have been awarded several new contracts representing a total value of approximately $77.4 million.
In Ontario, Riggs Distler Inc. obtained five contracts totalling $24.5 million, including a $9.6 million contract for the construction of a large underground substation in downtown Toronto.
The company also said it has signed several contracts in the U.S. worth a total of $47.1 million and another in Quebec worth $5.8 million.
“CVTech is proud to have been awarded these to have been awarded these contracts which highlight our extensive service offering,” president and CEO Andre Laramee said in a news release on Monday.
Desjardins analyst Pierre Lacroix said the new contracts represented more than 40 per cent of CVTech’s reported backlog, which stood at $184 million at the end of the first quarter of 2013.
“While most of the value of the new contracts is located in the U.S., the announcement is also noteworthy as it represents the first major contract awards for CVT since entering the Ontario market in mid-2012 and acquiring B.G. High Voltage in early 2013.” Lacroix said in a research note.
Lacroix also said he expected the shares to give back some of the 20 per cent gain realized on Friday, following management’s response to the allegations made by Aubert.