Stock Spirits and activist Amaral fire shots ahead of AGM vote

Ahead of a shareholder meeting next month, Stock Spirits and major shareholder Luis Amaral have both fired off new shots in a war of words that led to the early retirement of the Polish vodka maker's chief executive on Monday.

Stock Spirits pointed out that Portuguese cash-and-carry tycoon Amaral has an "an overriding conflict of interest" as he is the CEO and main shareholder of Eurocash, the London-listed company's largest customer, meaning his proposal to appoint friendly directors would give him "undue influence at the expense of other shareholders".

In a letter to shareholders ahead of the 23 May meeting, chairman David Maloney urged a vote against the proposals put forward by Amaral's Western Gate investment vehicle, which included the removal of chief executive Chris Heath, the appointment of two new non-executive directors and a review of the company's mergers and acquisitions strategy.

In response to Amaral's criticism of the company's significant loss of market share in the last two years, Maloney argued this had stemmed from repeated price cuts by competitors and a slowdown in the new product development programme, which he said has since been addressed with the 33 new products launched in Poland last year.

Rebutting allegations of corporate cost increases, he argued that forex and the costs of being a listed company were the major components of the increase, with the remaining cost base having reduced by over €3m.

"On a constant currency basis, total corporate costs, excluding FX, have actually decreased by €1.427m since IPO," he said, adding that an M&A review would be a "poor use of senior management resources".

Western Gate had argued that under the "remote control management" of the business from the UK, corporate costs have soared 111% since 2011, with corporate costs of €16.7m in the UK last year, against revenues that declined 11% over the same period.

Last week Stock Spirits followed encouraging first-quarter results with the appointment of a Polish managing director to address another of the failings cited by Western Gate, alongside the promotion of non-executive director Mirek Stachowicz to the role of interim CEO.

"We firmly believe that the board, as currently constituted, has the right experience to take the company forward until we find a permanent replacement as CEO and would not benefit from the addition of two non-executive directors hand-picked by Amaral," Maloney said.

Amaral issued a riposte later on Tuesday that accused the board of a "tendency to blame other people for the trouble they find themselves in".

He denied there was a conflict of interest from his position at Eurocash, arguing that Stock Spirits makes up "just 3% of Eurocash revenues and a negligible contribution to profit".

He concluded: “One thing that I do have is a view of what has been going wrong in their business on the ground in Poland, and my assessment was that they could only benefit from the knowledge and experience of the two independent NED candidates that are proposed.

"I can only conclude that the reason why they are rejecting the proposed NED candidates is because they didn’t come up with the names themselves, which seems a pretty weak excuse given how their business has been underperforming."

Shares in Stock Spirits were up 0.5% to 154.75p just before noon on Tuesday, up from their December low of 100p but half 2014's highs.