6 questions asked at 2022 Eagers Automotive EGM

July 15, 2022

Here is the text of the 6 questions asked at the Eagers Automotive EGM held on July 15 2022 to approve the $193 million related party transaction to purchase the ACT car dealership assets off Nick Politis, a director of Eagers and the largest shareholder with almost 28%. They were read out in full with comprehensive answers provided.

Question 1. Thank you for disclosing the proxies with the formal announcements to the ASX 66 minutes before the commencement of today's meeting. Well done on achieving such strong support with 97% of the proxies in favour. Which of the proxy advisers recommended a vote in favour and do you know roughly how many shareholders voted by proxy? When disclosing the outcome of the poll to the ASX, could you also include data on how many of our 11,000 shareholders went to the trouble of voting. Was it just the big shareholders who delivered this outcome of did thousands of small shareholder also support the deal?

Answer: more than 1000 shareholders voted in total which was a good turn out from large and small shareholders. Ownership Matters were the only one of the 4 proxy advisers to recommend against and there concerns were based on timing and structuring.

Question 2. It is a little disappointing that director Nick Politis wasn't able to dial in from overseas and be available to answer questions at today's meeting given that he is receiving $193m of company cash as a result of this deal. Therefore, could his other representative on the board, Dan Ryan, please address the question as to “why now”. Also, once this deal completes, what is left of the private Politis auto empire and is there any prospect of further similar deals like this being done.

Answer: Dan Ryan said they buy and sell from time to and the deal occurred primarily because Eagers was keen to get into the ACT market.

Question 3. Could Dan Ryan and the chair please address the question as to why this deal was done with 100% cash rather than having a scrip element, given that Mr Politis already owns almost 28% of the company worth $800 million? Doesn't this action alone create a perception that Mr Politis may also seek to cash out of some or all of his Eagers shareholding given that he clearly chose not to increase his shareholding as part of this deal?

Answer: Dan Ryan said it was Eagers that insisted on cash and Nick Politis has never sold a share in Eagers and was buying more on market last week.

Question 4. The March 30 announcement quoted a figure of $205 million which was later reduced to $193 million when binding contracts were exchanged. What caused this change? Also, the March 30 announcement mentioned that 400 staff will be coming across with the sale but later announcements mentioned that the ACT business has 450 staff. How many staff are exiting the business as part of this transaction and who is funding their exit payments, Eagers or Mr Politis?

Question 5. After this transaction, Eagers is now the dominant physical independent auto retailer in Australia. Can you think of another top 20 country where there is a single auto retailer with such a large market share and in what remaining states or territories do you think Eagers could expand further by acquisition without running into ACCC concerns.

Question 6. Final questions. Who does AP Eagers propose to be the Canberra-based senior executive running the operation and how many minority shareholders in the various entities being purchased are exiting the business as part of the move by Mr Politis to buy out all of the minority shareholders in his Canberra operation?

Answer: we've managed to retain the 3 key Canberra operatives but won't discuss their private arrangements with Mr Politis.