Tom Phillips

FLEDGLING publicly-listed 4WD and accessories company Automotive Solutions Group Ltd (ASG) has let go of its founder and managing director as the listed entity’s share price plunged and rival automotive business AMA Group Ltd pounced on 17.7 per cent of its shares.

AMA, in a statement to the Australian Securities Exchange (ASX) on Monday, said it had bought 17.77 per cent of ASG in an on-market transaction costing it $2.67 million.

AMA has a similar business model to ASG, owning businesses including the Gemini smash repair chain, ECB and Custom Alloy brand bull bars, Allanco auto electrics, and Fluid Drive. It is expecting sales this financial year of more than $40 million.

ASG’s share price fell last week spurred by a statement to the ASX of a weak financial outlook.

That was followed by the shock exit of managing director and CEO Tanya Mason – previously a finance executive with companies including BHP Billiton, Woodside Energy and Inter Mining and the marketing director of the Toyota LandCruiser Club of Queensland.

It triggered the move of its chairman, former Mitsubishi Motors Australia Ltd director and CEO, Tom Phillips, into the seat until a new CEO can be appointed.

AMA has made no further comment about its shareholding in ASG.

But ASG non-executive director, Bryce Wedemeyer, said in a statement to the ASX that: “We see AMA’s purchase as a vote of confidence in the company’s business and strategy that a competitor who has an intimate knowledge of the industry has taken a substantial stake in ASG.”

The departure of Ms Mason from the top role comes after ASG (not to be confused with Autosports Group Ltd) lodged a profit update to the ASX on April 26 that said, in part, that projected earnings would fall short for the current financial year because of increased competition from rival Victorian businesses.

Of the eight businesses that ASG bought and folded into the company that was listed in late December, 2016, five were “tracking in line with management expectations”, the earnings update said.

It previously estimated that the second half of the 2017 financial year would have revenue of $21.5 million and earnings before interest and tax of $3.3 million.

Those figures were revised on April 26 to $15-$16.5 million and $0.8-$0.9 million respectively.

Within a day, the share price promptly slipped from 76.5 cents a share to 26 cents a share. It is now trading at around 38 cents from its par in December of $1.

In a statement to the ASX on Friday, ASG chief operating officer Evan Camilleri said Mr Phillips will become executive chairman and bring “a heightened level of leadership, governance, reporting and management capability and experience while driving the company’s overall performance”.

Independent non-executive directors Peter Alexander and Mark Larkham will support Mr Phillips by coordinating and delivering sales and marketing initiatives.

The statement also said that the eight businesses that make up ASG were “committed to the improvement of ASG given the significant vested interest they hold in the business”.

“It is the intention of the New Senior Leadership Team of ASG to provide regular updates to the market in a structured manner, particularly in relation to how the company is performing financially and operationally,” the statement said.

GoAutoNews Premium contacted ASG and AMA but was told there would be no further comment.

By Neil Dowling