The board of Orient Express this week again refused to publicly commit to allowing its majority economic shareholders to determine the future of the company.
During the conference call to discuss its final quarter results, the question was repeatedly put and met with the same blandishment that the board would not stand in the way of a proposal that creates shareholder value.
The issue surrounds the dual voting structure of the shares in the company which leaves founder Jim Sherwood and associates controlling 81% of votes thanks to the extra weight given to the unlisted Class B shares.
It means that although the main economic value of the company is held by holders of Class A shares, they are unable to determine its outcome, as each share carries only 10% of the voting power of Class B shares.
Some holders of Class A shares are growing increasingly militant. During the conference call, a representative of SAC Capital said: "The history of this situation brings us beyond the hypothetical," a statement in open criticism of CEO Paul White's comments earlier in the call that he would not respond to speculation about hypothetical situations.
What this and other questioners demanded was that the board openly states that Class A shareholders would be allowed to vote on any proposed takeover on an equal basis. However, White remained implacable, stating: "The board understands what its duties are."
After ructions with Taj-owner the Tata Group and stake-building by the Dubai Investment Group at the end of last year, Orient Express has been subject to further pressure this month as various activist investors declared stakes.
SAC Capital, the fund set-up by Steve Cohen, increased its holdings to 22.5% by mid February. Indian Hotels has 11.5%, the Dubai Investment Group 9.2%, DE Shaw 5.7% and Black Rock 5.2%.
DE Shaw has been notably aggressive, questioning corporate governance standards at Orient Express. It also criticised the way in which Orient Express' board dealt with Indian Hotels.
The manner in which OEH's board rejected the proposals from Indian Hotels to form an alliance caused uproar in India. The vice-chairman of Indian Hotels, RK Krishna Kumar, demanded a public apology for what he described as libellous remarks.
Meanwhile, the Dubai Investment Group, a subsidiary of Government run Dubai Holding, indicated it would offer $60 a share for OEH. But again OEH's board was unwilling to discuss the possible offer publicly.
Privately, OEH has been indicating that it would put in place an objective system to evaluate any formal bid if one were to be presented. This would entail the board seeking external advice and allowing Class A shareholder to determine the outcome through the abstention of Class B shares.
It seems that the board is unwilling to make such a commitment in public for fear of starting an auction for the company. Its private argument is that any sale process would be a distraction from its core business and would leave it vulnerable.
With at least two potential buyers committed enough to take sizeable stakes plus many more probable suitors, the board's position is looking increasingly weak. There is effectively a "cold" auction being held for the company which is surely as distracting as any "hot" auction – the latest conference call was testament to that.
The business has, however, been able to keep growing strongly. Fourth quarter net earnings were up 53% to $10.2m over a year earlier and sales were up 12% to $151.2m.
The full-year results showed were up 21% to $599.6m and net earnings up 37% to $50.3m. Worldwide revpar was up 11% in local currency, 15% in dollars.