Quarto is convening a special shareholders meeting later this month to propose changes to its by-laws which would allow the company, currently nursing a £47m debt burden, to increase its borrowing.
In wake of Laurence Orbach stepping down from the board last week, shareholders are being asked to vote on 15th August in favour of removing restrictions on the number of directors Quarto can have on its board and to increase its borrowing limit from three to four times the company's share capital and reserves.
The international illustrated book publisher has experienced a turbulent few months after a shareholders' revolt took place mid-May. In the immediate aftermath of the coup, co-founder Orbach took back his previous seat as chairman six years on from being ousted and fellow shareholder Chuk Kin Lau of the Lion Rock Group printing company (who has a 27% stake in the company and whose firm is understood to be a customer of Quarto's) was made an executive director. When c.e.o. Marcus Leaver departed less than a week later, Lau was subsequently made Quarto's interim chief executive officer.
One top 10 shareholder in Quarto told The Bookseller the dramatic boardroom take-over resulted from concerns over the publisher's debt and a perceived lack of decisive action from the board. As of the end of 2017, the company had a £47m debt burden and its financial results for the year to end of 2017 had shown that whilst revenue had grown 1.4% to £152.4m, its operating profit for the year had fallen 58% to £7.2m.
In the interests of reducing the company's debt, in May 2018 a special resolution was proposed that would have enabled the directors to allot shares of the company representing a maximum of 5% of the total issued shares on a non-pre-emptive basis; however this was voted down during the company's a.g.m.
Now the firm is proposing a resolution seeking to increase its borrowings limit to "permit the company to draw down up to the maximum amount of its banking facilities".
Only shareholders with shares as of the close of business on 25th July will be able to participate in the vote on the matter.