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An investor agitating the AMP board is not backing down, following chairman David Murray's defence of AMP's decision to sell its life insurance arm for $3.3 billion on ABC's The Business program.
Merlon Capital Partners, which holds shares in AMP for institutional and retail clients, has today written a second letter to the board demanding further disclosures about the sale.
AMP's share price plunged to a record low last week amid a broader market sell-off, after announcing the sale of its life insurance business to global giant Resolution Life for $3.3 billion.
Merlon Capital slammed the deal as "dilutive, under-priced and value destroying" in a letter to AMP's board.
Yesterday, portfolio manager Hamish Carlisle said Merlon would lobby other shareholders to call an extraordinary general meeting and push for a spill of the board unless AMP responded to seven requests for information made in the letter.
Today, it continued its agitation with a new letter, listing several demands as still outstanding or only partially resolved.
"Thank you for facilitating … the release of additional information in relation to the AMP portfolio review and having David Murray outline the board's position in relation to some of the issues raised on the ABC's The Business program late yesterday," Merlon wrote.
"We are disappointed the board chose not to engage with us in relation to our requests or even acknowledge that it was in the process of reviewing our letter until after it was publicised in the media."
"Merlon fails to acknowledge that AMP was only obliged to make media comment after they provided a highly critical letter addressed to the AMP board to national media," AMP responded in a statement this afternoon.
Merlon continues to dispute the value AMP has placed on the future earnings of the life insurance arm, despite the company releasing further figures yesterday, clarifying its assumptions.
"You've got a business here that by its own calculation had assets valued at approximately $5 billion that they've sold for net proceeds of $3 billion, so there's a $2 billion wipe-out of shareholder value," Mr Carlisle said yesterday.
Mr Murray disputed that claim, saying the life insurance business was increasingly uncompetitive and would weigh on other parts of AMP's operations.
"You could own a business today, you could go and get it formally valued by an accredited valuer, and then wonder why it didn't sell precisely at that price, that's not how it works," he said.
One of Merlon's 'outstanding' requests is that the board disclose any independent advice assessing the shareholder value implications of the transaction and board minutes of any discussions of such advice.
"We have advisers, we look at their opinion, and formed our own," Mr Murray said in an exclusive interview on The Business on Wednesday.
That response has not satisfied Merlon, which today asked the board to "please provide advisers' opinion and your own opinions."
The fund manager also demanded AMP provide a "firm commitment" that it would return the proceeds of the sale to shareholders.
Mr Murray said the majority of the proceeds would be returned to shareholders.
"We have indicated that we will do that unless there are unforeseen circumstances, which a board must always say."
Merlon said that 'partially resolved' their request, but are seeking a further commitment that 'unforeseen circumstances' do not include further acquisitions.
This is unlikely to be the last AMP hears from the fund manager, with the letter containing references to reserving its rights to take legal action over statements that Merlon "misunderstood or misinterpreted the company's data."
"It is highly unusual, if not unique, for an activist shareholder to threaten defamation proceedings against a company for simply highlighting misunderstandings or misinterpretations in their analysis," AMP responded.
AMP shares climbed this session, building on yesterday's gains. The stock closed 6.9 per cent higher at $2.64.
Topics: business-economics-and-finance, insurance, international-financial-institutions, royal-commissions, stockmarket, australia
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