Power Struggle in AGT as Ainsworth Challenges Novomatic Over Reforms

The second-largest shareholder in Ainsworth Game Technology (AGT), Kjerulf Ainsworth, who owns 8.74% of AGT shares, has pledged to oppose the remuneration-related constitutional amendments proposed by controlling shareholder Novomatic AG at AGT’s Annual General Meeting.

Another Chapter in the Power Struggle in AGT Begins

Ainsworth said in a letter to shareholders that he believes the amendments proposed by Novomatic AG do not go far enough in addressing potential conflicts of interest and undisclosed payments to company executives and officers. Ainsworth pointed to a recent report by the Australian Financial Review alleging that AGT chairman Danny Gladstone and company secretary Mark Ludski received undisclosed bonuses of AUD 10 million and AUD 5 million ($7.1 million and $3.55 million), respectively, after Novomatic AG first acquired a controlling interest in AGT in 2018. According to Ainsworth, those payments would not be covered under the scope of the proposed amendments.

This latest development is yet another episode in the saga of Ainsworth Game Technology’s ownership. Currently, Novomatic owns 66.6% of the company. Kjerulf Ainsworth, the son of the company’s founder, Len Ainsworth, owns 8.74% of AGT shares, which is up from the 7.27% he owned last year. That share grew following a new campaign by Ainsworth launched last autumn with the goal of increasing his stake in the company to 10%, a target which is yet to be met.

What Else Did Ainsworth Say in His Letter?

In the letter, Ainsworth said that he supported efforts to improve governance at Ainsworth Game Technology. However, in light of additional information that had emerged, he had concluded that the proposed constitutional amendments did not go far enough in ensuring full transparency and integrity under the current circumstances.

He further argued that the proposed resolution and amendments failed to adequately address his concerns or explicitly prevent AGT officers and executives from receiving certain benefits that could potentially conflict with the interests of minority shareholders.

Referring to the alleged payments to Gladstone and Ludski, Ainsworth said such undisclosed benefits undermined shareholder trust and should not be allowed. He also claimed that the remuneration amendment resolution proposed by Novomatic AG would not address those issues. That’s because the benefits were allegedly provided by third parties and, in Ludski’s case, were not paid to a director.

Ainsworth also argued that the proposed amendments contained gaps and warned that the changes introduced through the Remuneration Amendment Resolution. This, according to him, risked being portrayed as fully resolving any governance concerns associated with AGT. He further stated that, in his view, the amendments did not meet the standard of probity expected by regulatory authorities.

One could argue that the current power struggles in the company would not have happened if Novomatic had managed to secure the remaining shares of AGT. However, an earlier deal to do so collapsed, marking yet another obstacle in Novomatic’s stated goal of total overtake of the Australian gaming provider.