FIH Directors oppose Argentine approach

FALKLAND Islands Holdings (FIH) independent directors’ statement that the prospect of Argentine-related control of the Falkland Islands Company (FIC) would undermine the company, has met with protest from the company in question.

Last week Dolphin Fund Ltd made an announcement on the London Stock Exchange about a possible offer for FIH, the parent company of FIC. Contact details for the company showed an Argentine owner, namely Eduardo Elsztain.

Dolphin claim their interest is purely commercial and they have no intention of disrupting the status quo of the Falklands.

The Falkland Islands Government (FIG) response was that while it was a matter for the shareholders to decide, the Government continued to closely monitor the status of Dolphin Fund’s potential bid.
“Any proposed change of ownership affecting assets held in the Falkland Islands will be scrutinised for compliance with Falkland Islands Law,” said FIG.

On Monday a statement was released by the independent directors of FIH (John Foster and Jeremy Brade) in which they said: “Having taken appropriate soundings and duly reflected on the approach, and noted reports that the approach is causing consternation in the Falkland Islands, the independent directors believe that the prospect of Argentinian-related control of the Falkland Islands Company  a subsidiary of FIH which has operations based solely in the Falkland Islands, seriously threatens to undermine the FIC business and the interests of its employees.”

They noted that the Falkland Islands Government had the power, “to grant or withhold licences to own assets and land in the Islands, including the licences that FIC currently holds.” They also acknowledged FIG’s statement regarding scrutinising proposed change of ownership for compliance with the Island’s law.

The statement concluded: “Accordingly, the independent directors regard the Dolphin approach as unwelcome and posing a real hazard to FIH.  They are not required to provide Dolphin with information on FIH and are not prepared to enter into discussions with Dolphin. They oppose the approach as unwelcome, as in their view it is entirely incapable of serving the best interests of FIC, FIH and its shareholders.”

Dolphin, which has been a shareholder in FIH for almost a decade, said however it would continue to seek “a constructive dialogue,” with FIH with a view to making an offer at a significant premium to the current 300p per share offer by Staunton Holdings who have also made a bid.

The statement noted: "FIH has never expressed any concern regarding Dolphin's involvement in FIH and Dolphin's support of FIH has been constant throughout this period despite FIH's poor share performance."

It added: "For this reason, reading the independent directors' unfortunate response, which states that Dolphin's request for information 'seriously threatens to undermine the Falkland Islands Company business and the interests of its employees', not only comes as a surprise to Dolphin but also appears to be an attempt by the independent directors (John Foster and Jeremy Blade) to avoid their fiduciary duty to act in the best interests of FIH and its shareholders as a whole.”

It claimed its intentions regarding FIH and its businesses were purely commercial and Dolphin had no intention to disrupt the status quo in the Falkland Islands. 

Dolphin said it is, "committed to building mutual trust with the Falkland Islands Government and its local population by expanding FIH’s existing enterprises on the Islands, creating new jobs, attracting new capital and further investment into the Falkland Islands economy, while complying with all relevant regulation and building a long-term relationship with the local community. 
“Dolphin intends to maintain a British management in FIH, should an offer be made by Dolphin,” the statement concluded.