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Caffyns faces shareholder revolt

Caffyns has been forced to defend the way it runs its business in response to a shareholder revolt.

Mark Bruce-Smith, who represents investment company New Fortress Holdings which owns 4.65% of Caffyns shares, has written a letter to the dealer group’s board and to shareholders calling for change to improve the business’s "dire performance".

Bruce-Smith said: "Unhappily, for the last decade Caffyns' performance has been dire. With amazing lack of forethought, the company has lurched from one so-called 'one-off crisis' to another. A pattern has now emerged and it is one of serious long term derogation of equity shareholder value."

Bruce-Smith is particularly unhappy about a class of preference shares he says gives the Caffyn family control to the detriment of other shareholders. He has written to Caffyns investors before its AGM next Wednesday to persuade them to back his campaign.

Bruce-Smith said: "At last year's AGM we put modest proposals to the incumbent management that would lay the foundation for a positive change in the company's fortunes. Sadly these were rejected, and, sadder still, the company seems to lack any invigorating ideas of its own to bring about change."

Caffyns said: "The board does not accept the comments in the letter to shareholders. “The board has a strategy which involves operational improvements and selective property disposals in order to generate value for shareholders. The board continues to work hard to execute its strategy in order to deliver value for all shareholders in an increasingly challenging economic environment for consumers."

Caffyns said it will be responding to questions put forward by New Fortress as part of its strategy to retain "constructive dialogue with its shareholders".

New Fortress has set up a blog called Driving Change at www.newfortress.net, which will feature updates on its campaign against the Caffyns board.

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