MMA has now released its 2017 AGM notice on 27 September. This included letters from new Chairman Andrew Edwards, director Tony Howarth (who stepped down as Chairman following Halom submitting its resolutions) and 
MMA's CEO Jeff Weber.

We were absolutely disappointed with the directors’ comments in the AGM notice. There continues to be inadequate accountability for the Company’s position. In our view, the Board did not adequately address the concerns we have expressed on our website and member’s statement (including executive remuneration and MMA’s current liquidity risks) or offer a real solution to its capital structure challenges. 

We will be periodically addressing these matters over the coming weeks ahead
of MMA’s AGM on 30 November 2017.

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Rebuttals to MMA's AGM Notice

Halom Board Representation & Stability

We were particularly disappointed by the comments in MMA's AGM notice that Halom’s resolutions:

  1. Offer Halom disproportionate representation on the Board; and

  2. Risk destabilising the Company’s recovery strategy.


Halom is seeking two Board seats. This is not a majority but is sufficient to add expertise and advocate for change.
Halom is seeking to stabilise the Company and not to destabilise it as alleged. Without refreshed oversight, the Company is unlikely to rectify previous courses of action and may be seriously destabilised. 

Halom, being financially backed by Michael Kum, is well resourced and comprises OSV industry people with experience since the 1970s. Leveraging the experience gained from the various upturn and downturn cycles since the 1970's, Halom has a good understanding of the current challenges facing MMA.

More coming soon

In its AGM notice, MMA said it is “pursuing the best interests of ALL shareholders.” (p21, para 2). The Board also said they remain “open to constructive engagement with Halom, as the Company’s largest shareholder.” (p21, para 3)
 
We find this statement quite surprising.
 
In October 2016, Halom first initiated engagement with the MMA Board in an attempt to find a solution to the Company’s precarious financial position. Between October 2016 and January 2017, there was ongoing dialogue between Halom and the Company.

Pursuing shareholders’ interests?

Surprisingly, on the 18th of January 2017, MMA’s CEO Jeff Weber sent Halom a letter terminating discussions. Part of the letter from Jeff Weber said “MMA believes that the Company’s best interests are served by prioritising discussions with its Lenders… and without diverting attention from those discussions by seeking to involve [Halom’s financial adviser] Moelis or Halom, or to introduce Halom’s recapitalisation proposal, at this stage.”
 
While we found Mr Weber’s email extraordinary, we did not engage further with him or management – as was requested of us. 
 
In light of Jeff Weber’s statement to Halom in January, that MMA wanted to prioritise discussions with Lenders instead of Halom, we consider MMA’s criticism of Halom for not participating in MMA’s strategic review quite ironic:
 

“Halom was invited to participate in the Company’s recent strategic review … however, this was rejected.” (p21, para 3)


We had already expressed our concerns to MMA, including providing it a 38 page presentation with detailed observations on the Company’s financial position on 10 January 2017 (supported by 70 pages of appendix materials). 

Compelled to Act

Notwithstanding the above course of events, we felt compelled to act in September this year. This was because we saw the Company’s FY17 financial results, the further deterioration in its gross leverage position (at 18x continuing EBITDA) and challenged liquidity position (with $18m of unrestricted cash vs. a pro-forma run rate cash burn of $22m per annum). 

We were also very concerned about the Company selling strategic assets to repay lenders, while eroding long term value for shareholders. An asset sale strategy may provide lenders some cash repayment of debt today, but it means the Company does not have the asset base it will need to capitalise on a future market recovery. It is not in all stakeholders interests.
 

"MMA believes that the Company's best interests are served by prioritising discussions with its Lenders... and without diverting attention from those discussions by seeking to involve ... Halom"

Jeff Weber, email to Halom,
18 January 2017