Burford Capital ditches finance chief in response to activist pressure
Under-fire litigation funder Burford Capital today announced it would appoint a new chief financial officer and seek a US listing following last week’s attack from shortseller Muddy Waters.
Burford said its chief finance officer Elizabeth O’Connell will be replaced by Jim Kilman, formerly vice chairman of Morgan Stanley Investment Banking, with immediate effect.
O’Connell is married to Burford’s chief executive officer Christopher Bogart, which Muddy Waters described as “unforgivable” from a governance perspective.
O’Connell will remain with Burford as chief strategy officer.
Read more: Shares crash as short seller Muddy Waters savages Burford Capital
Muddy Waters boss Carson Block said: “The notion that appointing Mr Kilman as CFO will substantively improve governance is a farce. It is clear from this that Burford is more interested in imposing fig leaves than real guard rails.
“We note Mr Kilman was Burford’s principal investment banker at Morgan Stanley. Burford investors would be much better served by a CFO from the outside who is untainted by Burford’s conduct to date.”
Muddy Waters blasted Burford last week in an attack that sent its share price down 45 per cent.
The activist shortseller criticised its use of fair value accounting, where unrealised gains are included in its books, and also attacked its governance structure and its listing on London’s junior Aim market.
Burford shares rose nearly 14 per cent following the announcement this afternoon to hit 884p.
Burford’s shares closed at 1,381p on 5 August, the day before Muddy Waters trailed its attack on Burford.
Read more: Burford Capital alleges ‘market manipulation’ ahead of Muddy Waters short attack
Burford said today it would seek an additional listing on either the New York Stock Exchange or the Nasdaq by the first quarter of 2020.
If neither of these were possible it said it would seek a premium listing on the London Stock Exchange.
Muddy Waters also questioned the independence of Burford’s board, which is made up of four directors who have been in place since the funder’s 2009 listing.
Burford said today it would add two new independent directors to the board “as rapidly as possible”.
When those directors are in place, it said David Lowe would step down after its next annual meeting and chair Sir Peter Middleton would step down after the following annual meeting.
Middleton said: “Companies are owned by their shareholders, and when the shareholders speak, it is the role of boards and management to listen. While we may take a different view on some of these points, shareholders have clearly spoken and we have listened, just as Burford has throughout its existence.
“We trust that these governance enhancements operate to bolster investor confidence in Burford as it enters its next era of growth and success.”