Book Publisher Braced For Showdown
One of Britain's most prominent non-fiction publishers is poised to bow to shareholder pressure and convene a meeting aimed at ousting the company's founder and chairman.
I understand that Quarto Group, which is best-known for self-help guides and books such as 100 Fondant Animals for Cake Decorators, will announce in the coming days the date of an EGM demanded by investors who own approximately 20 per cent of its shares.
The notice of the meeting will come more than ten weeks after Quarto received a written request from Harwood Capital, which wants to force out Laurence Orbach, the company's co-founder, chairman, chief executive and largest shareholder.
Harwood wants to install Tim Chadwick, a publishing industry veteran, to run the company in his place.
Mr Chadwick is understood to be unhappy that Quarto has taken so long to schedule the meeting. Despite its London listing, Quarto operates according to Delaware company law by virtue of its incorporation there, which allows companies to wait much longer before responding to shareholders' demands.
Under UK law, EGMs are supposed to be convened within 49 days of a request being made.
A letter written by Mr Chadwick, and which has been leaked to Sky News, includes a litany of complaints about the management of Quarto's business, including "results [which] have been too erratic to conclude that any tangible growth in earnings per share has been achieved" and overspending on publishing assets "which are fundamentally more risky than the company's traditional business of co-edition publishing".
Quarto's publishing imprints, which include Apple Press, Aurum and Quantum Publishing, are among the best-known on the non-fiction shelves of bookshops across the country.
In the letter, Mr Chadwick demands that Quarto sell or close "all loss-making, relatively risky, or unproven activities and the net proceeds to accelerate debt repayment".
He writes that The Wellcome Trust, the medical research foundation that is a major investor in the London stock market and a shareholder in Quarto, is also unhappy with Quarto's existing management.
Quarto declined to comment on the timing of its response to the EGM request from Harwood. Mr Chadwick could not be reached for comment.
Quarto's shares closed up 0.7 per cent on Monday at 140p, giving the company a market value of just over £27m.