The shareholders attempting a boardroom coup at Intervid have failed to get the support of VenFin, which owns 17% of the company.
VenFin also has an indirect investment in Intervid International through a convertible bond held by associate RFS Holdings, which is the principal creditor with which Intervid is currently in talks.
Intervid said this week that it had received notice that the Howard Family Trust, the James Howard Family Trust and the Kate Howard Family Trust was calling for the removal of chairman Bill Lambert and the appointment of three non-executive directors nominated by the Howard family.
The issue is to be put to shareholders at a general meeting, although the Intervid board is divided on the matter. The majority view of the Intervid board is recommending that shareholders vote against the proposal, citing among other things the possibility that a disruption at this stage could affect confidence in a turnaround process and talks with financiers.
Because of RFS`s right to convert its loan of $50 million into Intervid shares from June 2005, that conversion would dilute the holdings of existing shareholders. Talks with RFS to minimise the dilution could also be jeopardised by a disruption to the board, according to the majority view.
The minority, being executive director James Howard and non-executive director Robin Howard, have declined to make a recommendation at present.
VenFin says it is concerned about developments at Intervid.
"To date, the Howard family has not put forward proposals regarding Intervid`s future financing requirements and their proposal to restructure the Intervid board has, in VenFin`s view, created some uncertainty over Intervid`s future.
"As such, VenFin is strongly opposed to the proposal put forward by the Howard family to restructure the Intervid board. VenFin broadly agrees with the views expressed in the majority recommendation."
The group also says it will have to reconsider its position in Intervid if the Howard family does not "shortly propose a viable and acceptable alternative solution to Intervid`s future financing requirements".
However, it says that in the interim it will take all necessary steps to protect its investment "even though this investment represents a very small proportion of VenFin`s portfolio of investments".
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