Excelsior Capital (ASX: ECL) Liquidation Vote: Sell or Hold?

Excelsior Capital (ASX: ECL) faces its most dramatic shareholder meeting in years today, with investors voting on whether to liquidate the company entirely and remove its CEO. Shareholders controlling at least 5% have requisitioned resolutions, essentially a formal demand forcing the board to hold a vote to wind up Excelsior, appoint liquidators from BRI Ferrier, and replace CEO Danny Herceg and director Ryan Mount with two new directors. The board has unanimously recommended that shareholders vote against the proposals, setting up a high-stakes corporate governance battle that will determine the company’s future within hours.

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Shareholders Demand Liquidation After Years of Investment Portfolio Underperformance

The requisitioning shareholders are pushing three connected resolutions to force voluntary liquidation under Sections 491 and 495 of the Corporations Act, the legal provisions governing company wind-ups. Their proposals include:

• Liquidate the company and appoint James Taplin of BRI Ferrier as liquidator
• Remove directors Danny Herceg and Ryan Mount immediately
• Install new directors Luke Cummings and David Prescott to oversee the process

What makes this particularly significant is Excelsior’s troubled governance history. The company previously faced lawsuits over preference share treatment that cost management and directors over $500,000 in legal settlements, suggesting a pattern of shareholder discontent.
The core grievance centres on the investment portfolio’s performance since Excelsior sold its profitable CMI Electrical operations to IPD Group in January 2024. In their statement to shareholders, the requisitioning group bluntly asked, “Is it sophisticated to lose money when every single Vanguard ETF increases in value materially?” This cuts to the heart of the issue: shareholders believe management destroyed value through poor investment decisions, while simple index funds delivered strong returns.

The Numbers Tell a Troubling Story

Here’s what the valuation reveals about market confidence. Excelsior currently trades at $3.30 per share against net tangible assets of $3.98, a 17% discount. That gap is significant. When a company trades below its asset value, the market is essentially saying management will destroy 17 cents for every dollar of assets they control. In our view, this discount reflects deep investor scepticism about the board’s ability to generate acceptable returns.
The board counters by pointing to the fully franked 4-cent dividend paid in March 2025 and arguing that removing directors would result in “lost knowledge and history”. However, the requisitioning shareholders argue this misses the point entirely: continuity only matters if management actually delivers results, which they claim has not happened.

The Investor’s Choice: What Each Path Actually Means

For shareholders deciding how to vote, here’s what each option realistically means in dollar terms and timing:

Vote FOR liquidation:
• You’d receive approximately $3.40-$3.60 per share after liquidation costs (typically 10-15%)
• Distribution timeline: 6-12 months as assets are sold and wound up
• The bet: Taking certain cash now beats hoping this management team improves
• Tax consideration: May trigger capital gains; consult your accountant

Vote AGAINST liquidation:
• You’re backing management to close the 17% valuation gap and justify the $3.98 NTA
• You continue holding an investment portfolio run by the current team
• The bet: Management’s strategy will eventually work, and the discount will narrow

Hold and wait:
• If liquidation passes, you receive distributions over 6-12 months
• If the board wins, shares likely trade around current levels ($3.30) short-term
• This approach lets you assess the outcome before deciding whether to sell

The key risk is this: if you believe the investment portfolio will continue underperforming, you’re effectively choosing between locking in a 17% discount to asset value now or risking that discount widening further. The outcome, decided within hours, will either maintain the status quo or trigger the orderly dissolution of a $95 million entity, a rare example of shareholders directly determining their company’s fate.