88% Stakeholder’s Delisting Vote Under Scrutiny Amid Liquidity Concerns

Background to the Dispute

Pact Group Holdings Ltd (ASX: PGH), a major player in the packaging sector, announced its intention to delist from the ASX earlier this month. Following formal approval from the exchange, the company scheduled an extraordinary general meeting (EGM) for 12 June 2025 to seek shareholder approval for the delisting. However, this process has now been challenged by an application to the Takeovers Panel, raising significant questions about the fairness and transparency of the move.

Key Concerns Raised by the Applicant

The application, submitted by Mr Jeremy Machet and Scrap Invest Pty Ltd, highlights several issues. Central to their argument is the low liquidity of PGH shares, which they say forces shareholders into a difficult position: sell quickly at potentially depressed prices before trading suspension on 14 July 2025, or hold illiquid shares post-delisting. This compressed timeframe, they argue, unfairly pressures minority shareholders.

Further, the applicants contend that the notice of meeting for the EGM may lack balanced information. They point out that the major shareholder, holding an overwhelming 88% stake, is positioned to vote decisively in favour of delisting while simultaneously benefiting from the potential acquisition of additional shares. This concentration of control raises concerns about the integrity of the shareholder vote and the potential for conflicts of interest.

Allegations of Selective Disclosure

The applicants also accuse PGH of framing the company’s position negatively in its communications, emphasizing issues like a concentrated share register and listing costs, while downplaying positive developments such as revenue normalisation in Q3 FY25, ongoing debt refinancing efforts, and potential divestments. This selective disclosure, they argue, could mislead shareholders about the company’s true value and prospects, skewing their decision on the delisting resolution.

Relief Sought and Potential Implications

In response to these concerns, the applicants have requested interim orders to pause the delisting process until the Takeovers Panel makes a determination. They also seek final orders that would restrict the major shareholder from voting on the delisting resolution, mandate enhanced disclosures in the EGM notice, extend the trading suspension timetable by at least 60 days if delisting proceeds, appoint an independent third party to oversee the process, and require PGH to offer a post-delisting share sale facility at a fair value assessed independently.

The Takeovers Panel has yet to appoint a sitting panel or make any decision on the application. Its eventual ruling could have significant ramifications not only for PGH shareholders but also for broader market perceptions of governance standards in delisting scenarios.

Looking Ahead

As the EGM approaches, the unfolding regulatory scrutiny and shareholder activism highlight the complexities companies face when seeking to exit public markets. For PGH, the challenge will be balancing the interests of its dominant shareholder with those of minority investors, while maintaining transparency and market confidence.