Diaz
TWO CONTENDING parties are wooing the 1,500 Kingston Wharves stockholders to secure their backing at its February 18 extraordinary general meeting.
A consortium of investors wants to overthrow the board and take control of the company, says board chairman Rafael Diaz. To do this, the consortium needs to secure the votes of some stockholders who are not members of their group at the February meeting.
The meeting is being convened in response to a request from several stockholders who wish to remove eight members of the 12-member board, replacing them with nine members of their choice, Mr Diaz said. His Tuesday statement said the meeting was being called to accommodate the demand of three shareholders.
Directors took into account the gravity of the request by the three shareholders, Mr. Diaz said. His statement named the three as being Transocean Shipping Limited, Maritime & Transport Services Limited and the Shipping Association of Jamaica Property Limited.
"We are pleased to note that Kingston Wharves Limited has acceded to our call," said a Tuesday statement issued by the consortium of Jamaica Freight & Shipping Company Limited Pension Fund, Jamaica Fruit and Shipping Company, Lanaman & Morris (Shipping) Limited, Maritime & Transport Services Limited and Transocean Shipping Limited.
The consortium controls 49 per cent of the Kingston Wharves shares.
Their challenge was launched because they were "concerned about the apparent merging of Grace, Kennedy and Kingston Wharves interests," the dissenting shareholders said. Their statement said that under a management contract, several Grace employees including top management were employed full time and paid by Kingston Wharves, leading to possible conflicts of interest and preferential treatment for Grace.
Grace controls 40 per cent of the Kingston Wharves shares.
Kingston Wharves managing director Robert Kinlocke told Sunday Business that just one Grace employee had been seconded to Kingston Wharves.
Mr. Kinlocke said he himself was not an employee of Grace, but served as Grace's divisional director for its maritime division in order to facilitate the effective operation of the Grace management contract.
The consortium stated that Kingston Wharves had evicted four stevedoring companies with two weeks notice and the Wharves did not have the infrastructure or manpower to carry out their tasks. This, they said, put the company at risk as three of the stevedoring companies controlled 70 per cent of the stevedoring at the Kingston Wharves.
"The days of the independent stevedoring company are over," Mr. Kinlocke said.
He said modern port facilities did not use several independent stevedores for loading and unloading vessels as this was inefficient. The neighbouring Kingston Container Terminals had eliminated such services and that was the reason why the stevedores terminated including the company owned by Grace.
As well, the notice to the stevedores had been extended for 15 months and their termination was now due on February 23, he said. Kingston Terminals had the expertise and skills to manage stevedoring as he said, "we have trained enough people to do it."
The consortium has stated publicly that they would reintroduce their independent stevedoring services if they regained control of the company. Mr. Kinlocke said, "This would be a step backward"
The consortium also questioned the quality of governance at Kingston Wharves, suggesting that the handling of the impasse with their grouping showed an inability of the Kingston Wharves board to distinguish the interests of Grace from those of Kingston Wharves."
We are concerned that Kingston Wharves is the only company listed on the Jamaica Stock Exchange which does not manage itself," the group's statement said. "We view this as unacceptable."
The fact that it is the only company managed in this way, "is not an indication that it should not be so," said Grace Chief Executive and Managing Director, Douglas Orane. The critical issue for stockholders was whether the company was being managed effectively.
Kingston Wharves operated as an autonomous entity with its own board of directors and has been managed by Grace since 1945, Mr. Orane said. The modern company merged with Western Terminals and Grace won the contract to manage the combined entity.
The composition of the board was determined by the subsequent resignation of the former Western Terminals directors and their replacement by independent directors. Mr. Orane said those independent directors have called for an outside audit to determine the effectiveness of the Grace management and the results would be available over the next few weeks."
It is our hope that the new board of directors will be broad-based and will include Grace representatives, as well as independent members," the dissenting shareholders stated.
Mr. Orane said stockholders needed to question which group could manage Kingston Wharves better, and which served the interests of stockholders better.
