Activist investor Sandon Capital ramps up campaign to oust Southern Cross Austereo board

Southern Cross Media Group says its major shareholders will vote against any attempt by activist investor Sandon Capital to overturn the board.

Sandon Capital managing director Gabriel Radzyminski (middle). Picture: John Feder/The Australian.

Southern Cross Media Group (SCA) says it has the support of major shareholders to repel any attempt by activist investor Sandon Capital to turf out the board.

Sandon notified the company on Friday that it plans to move resolutions to remove Heith Mackay-Cruise, Ido Leffler, Carole Campbell, and Marina Go as directors at the next general meeting.

As reported by The Australian on Sunday, Mr Mackay-Cruisespent the weekend confirming the support of the company’s four major shareholders – Thorney Investments, Spheria Asset Management, Ubique Asset Management and ARN Media – who hold more than 50 per cent of the company’s stock.

Southern Cross Austereo chair Heith Mackay-Cruise.

“SCA notes that (the major shareholders) ... intend to vote against such resolutions,” the company, which operates Australia’s biggest radio network under the Triple M and Hit radio banners, told the ASX on Monday morning.

“SCA considers the resolutions being proposed by Sandon are a considerable distraction and

unnecessary cost to SCA. Given the limited prospects of success ... SCA strongly encourages Sandon to withdraw the section 203D notice and confirm it will take no further steps to

move the proposed resolutions without further delay.”

Sandson’s notice under section 203D of the Corporations Act to remove directors at the next general meeting was executed by its investors One Fund Services and One Managed Investment Funds, which hold 5 per cent of the SCA’s stock.

SCA said it has not received any notice requiring it to call a general meeting.

A spokesperson for Sandon declined to comment.

Sandon chief executive Gabriel Radzyminski wrote to Mr Mackay-Cruise on May 7, saying he was “stunned” SCA’s directors decided to resume the payment of dividends in light of a trading update posted the previous day.

The media group reported non-revenue related costs for FY25 are forecast to be about $265m, a $5m improvement on the previous forecast of about $270m.

“When we met with management following the 1HFY25 result, we made clear our view that the continued suspension of dividends (in favour of paying down debt) was both prudent and something we supported,” he said.

“We do not consider the decision to resume dividends at this stage to be a prudent decision given the CEO’s own admissions regarding the difficulties in forecasting revenue growth and the lack of further reductions of the cost base.

“We consider the decision to resume dividends to be a purely defensive move by the board; read in the context of our discussions regarding the need for changes at board level.”

Sandon Capital CEO Gabriel Radzyminski and Southern Cross Media Group chair Heith Mackay-Cruise

Mr Radzyminski said the decision appeared to be an “attempt by the board to placate shareholders”.

“We are confident most shareholders will see this decision for what we consider it to be – an ill-advised and shortsighted attempt at “self preservation,” he said in the letter.

As well, Mr Radzyminski said he was disappointed the directors proceeded with an executive incentive scheme, announced last week with share price goals ranging from a threshold of $1 for 50 per cent vesting, to $1.20 for 100 per cent vesting and a stretch of $1.50 for 150 per cent vesting.

“We consider the share price targets to be unrealistic,” he said.

“Generally, long-term incentives must be hard to achieve, yet plausible. They must also avoid anchoring management, directors and shareholders to beguiling, yet unattainable targets.

“We believe the board making these announcements (on May 6) is a thinly-veiled bid for short-term shareholder support – only strengthening our case for board change.”

Mr Radzyminski also said in his letter the company failed to detail how revenue collected from federal election advertising boosted company coffers.

“Due to the one-off nature of election advertising, we do not consider the revenue growth provides an accurate representation of the underlying business, nor is it representative of the sustainable future growth rate of the Company,” he said.

Southern Cross Austereo, led by CEO John Kelly, reported a net profit of $3.2m in the six months to December 31, an increase of 5.5 per cent on the previous corresponding period.

SCA in its notice to the ASX on Monday said the company had strong operating momentum into the first four months of calendar year 2025, with audio revenues growing by ~9 per cent and ahead of previous guidance.

“Given the current operating performance and the momentum of the business, the SCA board and its major shareholders are of the view that it would not be in the best interests of all shareholders to support (Sandon’s) proposed resolutions,” it said.

Shares in the company were trading flat at 71c at midday on Monday.