I’ve had enough: Estia boss Paul Gregersen quits

Estia CEO Paul Gregersen caved into investor pressure for his removal, says the chairman of the ailing aged care firm.

Estia CEO Paul Gregersen told chairman Pat Grier had had “had enough”.

Estia Health boss Paul Gregersen quit as CEO by telling chairman Pat Grier he had had enough, caving into investor pressure for his removal on the back of disappointing financial results and a significant slump in the share price.

Mr Grier told The Australian today that Mr Gregersen broke the news of his resignation during a scheduled meeting in Sydney yesterday.

“We had a normal agenda and during the discussions he said he was there to hand in his resignation,” Mr Grier said.

“He basically walked in and said he had enough. He said he had been thinking about it over the previous weekend and it was time for him to move on.”

Shares in the aged care company (EHE) have been on a continual slide on the back of market concerns about its aggressive growth strategy funded through residential deposits and the level of residents Estia had categorised as “high care needs” — a category that attracts higher funding but is under review by the government. The company’s shares are down more than 50 per cent after starting the year at $7.36.

The outlook took a further hit at the aged care company’s financial results last month, which missed its previous earnings guidance and saw Estia ditch its previous strategy of owning 10,000 beds by 2020.

Analysts widely slashed price targets on the stock, with some cautioning that its balance sheet looks stretched.

Mr Grier said that naturally when a share price dropped as much as Estia’s had, conversations with shareholders about the chief executive’s tenure were common.

“That was one of the reasons he thought it was time to move on but it was not me saying it, it was him saying it,” Mr Grier said.

“You can’t ignore the pressure with share price movements like that and there was pressure there.”

Estia chairman Pat Grier.

Non-executive director Norah Barlow, formerly the head of listed aged car provider Summerset Group, has stepped into the role as interim chief executive while the company searches for a replacement.

Investors backed the move today, with shares in the company up almost 5 per cent at $3.24.

Pressure on Estia’s shares intensified two weeks ago after founder Peter Arvanitis abruptly quit the company and dumped his $55 million stake.

Despite market rumours Mr Arvanitis was forced by his banks to sell his shares, his private investment vehicle, Aged Services Victoria, denied that the share sale was linked to a margin call by a financial institution.

Mr Grier said today that he had been in contact with Mr Arvanitis, who had told the chairman the decision to dump his 10 per cent take was a “family decision”.

“I’m not privy to what that means, that is what he says and I have to take that as what he says. I don’t know any more than that,” he said.

Mr Grier, the former head of private hospital Ramsay Health Care, said while the past few months had been an “interesting saga” for him, he still strongly believed the future for the company was “fantastic”, adding that he was not backing off from it.

“I think Estia has a strong future and I still believe strongly in the aged care sector,” he said.

“There are a lot of pluses we can do to rectify some of the questions about the organisation.

“We are focusing on de-leveraging and we agree that we need to focus on that. We will focus on adding extra value to our existing business and look at what we can do with assets that are not performing.”