‘Flexibility’ behind rationale for Valpak buyout

Mr Gough who stands to own a 27% stake in Valpak if the plans are approved said that changes in government policy surrounding packaging and producer responsibility meant that the company needed to branch into new areas, for which it would need new investment.

The best way of doing this, he said, was by changing the structure of the company and by transferring any risk from compliance scheme members onto its executive directors and senior management.

A private company can be more competitive than a mutual, he said. It has got more flexibility to do more things for people – it would not be not logical for a members organisation to bear the risk.

Under the management buyout plans being put forward, members of Valpak would be paid an initial cash consideration of 170to surrender their legal ownershipof the company (see letsrecycle.com story) .Valpak’s four executive directors and senior management will then acquire shares of the company – paying between 220,000 to 20,000 for different-sized stakes.

Asked if the companys executive stood to benefit disproportionately from the deal, Mr Gough stressed that the companys independent, non-executive directors had looked at other options before recommending the management buyout. He also said they had approved the company valuation on which the cash consideration being offered to Valpak members has been based.

The ongoing uncertainty over the PRN system also created a high level of risk for its new owners, he explained.

He said there will be risks as well as rewards, even going so far as to suggest that many independent observers have taken time out to tell me that the [PRN] system is not going to carry on.

Rushed

Mr Gough, who has been Valpak chief executive since 2003,dismissed any suggestions that the proposal was being rushed through in the summer despite members only being given two-and-a-half weeks to decide on how to vote, ahead of the companys Annual General Meeting on August 18.

He said: We are following our normal AGM process. Weasked what process we should follow from a legal perspective.

Mr Gough explained that the company had already received some votes electronically, and while he could not divulge how these had been cast he said: A number of our members prior to this were asking how Valpak would continue considering the uncertainty and were asking questions.

Positive

Overall, Mr Gough said he thought the proposal represented the best option for Valpak.

He said Its a very positive step for the business going forward. I think the PRN system is uncertain at the moment and Valpak will be looking to help members with a wider range of services.”

My personal biggest concern is for my staff. Im extremely proud of the company Valpak and extremely pleased and grateful for the efforts of the staff. The one thing a business can never deal with is external uncertainty. I hope by taking more control of the business we can address that.