Hornby directors defend chairman Roger Canham
The board of troubled toymaker Hornby has backed its chairman and is now urging shareholders to vote against proposals that would force Roger Canham to step down.
New Pistoia, Hornby's second biggest shareholder with a 20% holding, is pushing the firm to replace Mr Canham with Alexander Anton - a fellow shareholder and non-executive director of Victoria Carpets.
Directors have now been forced to hold a general meeting for shareholders to vote on New Pistoia's demands on May 16.
But the directors say the resolutions are "not in the best interests of the company or its shareholders as a whole" and "unanimously recommend" that shareholders vote against the proposals.
The board said: "The strategy currently being pursued by the board is well thought-out and is working; the current structure and composition of the board is consistent with good corporate governance, and the board has the support of a majority of its shareholders."
The votes will be binding, but will require a simple majority of over 50% to pass.
However, Hornby said a consultation found that shareholders including Phoenix Asset Management Partners Limited, Ruffer LLP and Downing LLP - which together represent a 53.96% stake - intend to vote against the proposals.
Mr Anton and New Pistoia lodged their demands earlier this month, saying the company's current strategy is "ineffective", "will continue to destroy value" and is "not aligned with creating wealth for all shareholders".
They added that Hornby has lost £31 million after five years under Mr Canham's leadership.
A string of profit warnings has resulted in Hornby's shares plummeting over the past year as the firm has struggled with falling sales.
But the Scalextric-to-Airfix firm, best known for its model railways, has embarked on a painful turnaround which has seen it reduce product ranges and cut back on investment as part of plans to shore up the balance sheet.
In early April, Hornby said it was starting to see early signs of recovery as the first stage of its turnaround plan - which saw it restructure its UK and European operations - come to a close.
Hornby shares were down over 1% in mid-morning trading.