Photo-Me executives agree to stand down

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The Independent Online

The top executives of the photo-booth maker Photo-Me have caved in to pressure from rebel investors and agreed to stand down.

However, its chairman Vernon Sankey and chief executive Serge Crasnianski are not willing to go immediately as demanded by Principle Capital and Cycladic Capital, the rebels who say they now have 50.4 per cent of shareholder support.

Mr Crasnianski is to retire as soon as the disposal of the company's more profitable photo-booth division is complete while Mr Sankey will no longer seek re-election as a director at the company's annual general meeting in October.

Mr Sankey said if the chief executive were to resign now it would be "absolutely catastrophic" for the business. "He is the most knowledgeable person in the industry," he said. "He has built relationships with customers who would be very loyal."

Earlier this week, Principle, the hedge fund investor Brian Myerson's fund, which owns 7.2 per cent of shares, and Cycladic, which owns 11 per cent, demanded an extraordinary general meeting to vote on whether the pair should step aside. Principle's key concern was that the vending division, which has 22,000 picture booths, would be sold off undervalued to a private equity buyer. Mr Sankey said yesterday that an EGM would jeopardise the sale process and would be "disruptive and harmful" to the operational management of the business. He added that the company's response had the unanimous support of the board. "If they don't like it, then there is nothing else I can do," he said, adding that an EGM would probably fall a week before the AGM on 17 October.

If the executives stood down immediately, it would save the company the expense of calling an EGM and prevent any disruption to the strategic review process, the rebels argue. They support the appointment of the company's senior independent director Martin Reavley as interim chairman. Mr Sankey said it would be difficult to recruit a new chief executive before the sale process is complete.

Earlier this week, Principle's senior analyst Chris Vincent said Photo-Me "currently gives the impression of being a private company that is run for the benefit of the chief executive and not for its shareholders". In July, Principle called for an EGM to force Photo-Me to put two new independent directors on the board and to make a decision on whether it would sell the photo-booth unit.

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