Dolphin Capital Investors removed Miltos Kambourides as a board director
Dolphin Capital Investors Ltd on Monday said it has terminated the contract with its investment manager, effective immediately, after discovering what it called a "repudiatory breach of contract".
The agreement refered to the sale of the resort to Grivalia for €5.8 million, simultaneously transferring to the buyer all of DCI's loan obligations amounting to €76.5 million. In the scheme of the buyer, Dolphin Capital Partners participated with a percentage of 15% and its interests Miltos Kambourides, who would continue to manage the hotel, while retaining the right to purchase up to 30% of the new ownership scheme.
The London-based investor in high-end resort developments in the eastern Mediterranean said it ended the investment management agreement with Dolphin Capital Partners Ltd. It had originally entered the agreement in December 1, 2021.
Dolphin Capital Investors also removed Miltos Kambourides as a board director. Kambourides is the co-founder & managing partner of DCP.
Dolphin Capital Investors said it learned that DCP "entered into an undisclosed option agreement with the purchaser of the Amanzoe resort in Porto Heli, Greece at the same time that the company sold its interest in the resort" back in 2018. It said the option agreement entitled DCP to buy an additional 15% of DolphinCI Fourteen Ltd, the special purpose vehicle holding the Amanzoe resort. The undisclosed option agreement was additional to a separate agreement that had been disclosed for DCP to acquire 15% of DolphinCI Fourteen.
The undisclosed DCP agreement put Dolphin Capital Investors in breach of the listing rules of AIM, the company explained, and it will be self-reporting the breach to the London exchange.
"The company is seeking to pursue all legal options to recover the value arising from the undisclosed option agreement that is the company's property," Dolphin Capital Investors said. "The directors believe that this value could be material in the context of the size of the company, but at this time do not have enough information to put a precise quantum on this."
Dolphin Capital Investors said it will put in place additional resources to enable it to self-manage its assets, and it has no current intention to appoint a new investment manager.
The dispute with the company's investment manager adds to recent turmoil at Dolphin Capital Investors. Last month, Martin Adams, who had been board chair since June 30, 2021, resigned as a director with immediate effect, replaced by Sean Hurst.
Dolphin Capital shares were untraded on Monday, closing on Friday at 3.85 pence. The stock is up about 7% over the past 12 months.
Dolphin Capital Partners has issued an announcement in response
In response to the announcement, Dolphin Capital Partners Limited in turn issued the following announcement.
"Following the announcement issued this morning by Dolphin Capital Investors Limited ("DCI"), Dolphin Capital Partners Limited ("DCP") and Miltos Kambourides would like to make clear that DCI's unilateral actions, including the alleged termination of the existing Investment Management Agreement between DCP and DCI are completely unfounded, abusive and illegal.
The allegations put forward by DCI as justification for its above actions are equally unsupported and defamatory.
DCP is absolutely certain of the substantive and legal correctness of the positions and expressly reserves the defense of all its legal and contractual rights.
The whole matter was created by the premeditated and self-serving actions of DCI directors Nick Paris and Nicolai Huls, and is now in the hands of DCP's lawyers, who have been expressly instructed to take all necessary action to protect DCP's interests .
Miltos Kambourides, through DCP of which he is a 100% shareholder, remains the main shareholder of DCI.
Finally, it is pointed out that these developments do not affect One&Only Kea Island in which DCP is a shareholder and manager and in which DCI does not hold any interest.
Dolphin Capital Investors announcement in London's Stock Exchange
"This announcement has been determined to contain inside information for the purposes of the UK version of the market abuse regulation (EU) No.596/2014.
20 March 2023
Dolphin Capital Investors Limited (the "Company")
Termination of the Investment Manager and Removal of a Director
The Directors of Dolphin Capital Investors Limited (the "Company") announce that the Investment Management Agreement dated 1 December 2021 (the "IMA") between the Company and Dolphin Capital Partners Limited ("DCP") has been terminated by the Company with immediate effect on the basis of a repudiatory breach of contract by DCP.
It has come to the Company's attention that DCP entered into an undisclosed option agreement with the purchaser of the Amanzoe resort in Porto Heli, Greece at the same time that the Company sold its interest in the resort, as originally announced on 2 August 2018 (the "Undisclosed Option Agreement"). The Undisclosed Option Agreement entitled DCP to acquire an additional 15% of the share capital of DolphinCI Fourteen Limited (the special purpose vehicle holding the Amanzoe resort). A separate agreement for DCP to acquire 15% of the share capital of DolphinCI Fourteen Lιmited had been disclosed and authorised by the Company.
The Undisclosed Option Agreement had not been disclosed to the Company by DCP at the time of the sale of DolphinCI Fourteen Limited. The failure by DCP, as agent of the Company under the terms of the IMA, to disclose the existence of the Undisclosed Option Agreement, and to fulfil its other duties as agent, constitutes a repudiatory breach of the IMA that has resulted in the termination of the IMA by the Company.
The Company is seeking to pursue all legal options to recover the value arising from the Undisclosed Option Agreement that is the Company's property. The Directors believe that this value could be material in the context of the size of the Company, but at this time do not have enough information to put a precise quantum on this.
The independent Directors of the Company have also removed Miltos Kambourides, who is the Co-Founder and Managing Partner of DCP, as a Director of the Company with immediate effect.
Had the Company known about the Undisclosed Option Agreement, it would have been treated as an AIM Rule 13 related party transaction - as such, the Company will be self-reporting to the AIM team at the London Stock Exchange this breach of the AIM Rules.
The Directors are putting in place additional resources, including funding, in order to enable the Company to self-manage its assets and to enable the continued construction of the Kilada Hills Golf & Country Resort and the various asset sales processes currently underway. Nicolai Huls and Nick Paris have become Executive Directors of the Company with immediate effect and have been appointed as Managing Directors.The Company has no current intention of appointing a new investment manager. The Directors remain committed to the objectives for the Company that were approved by Shareholders at the Company's Extraordinary General Meeting held on 22 December 2021.
Further updates will be provided in due course."