Nylex shareholders met today to consider removing three directors from company's five-person board and replacing them with three nominees from Pivotal Group (Aust), which holds a stake of around 5.1 per cent in Nylex and called today's meeting.
Resolutions to replace the current directors were narrowly defeated.
Pivotal Group executive chairman Leslie Chaplin, who was one of the nominees for the board, said Nylex had been underperforming, its share price had dropped dramatically and it was time for a change.
One angry Nylex shareholder said the company was on life support, propped up by banks, and there was nothing to lose by changing the make-up of the board.
Another shareholder said Nylex hads produced a string of bad financial results, which had only generated excuses from the board and new turnaround strategies.
But Mr George said Nylex's woes were a legacy from 10 years ago.
"The company is what it is,'' Mr George said.
"The company is the result of a debt fuelled spending binge 10 year ago.''
Mr George said that in consequent restructures, good businesses were sold under pressure and agreements entered into with purchasers that continued to bite the company to this day.
"This board and any future board can only do with what it has,'' he said.
Mr Chaplin said that if he were elected to the Nylex board there would be a strategic review of the company's operations to see if its financial performance could be turned around.
But he said he didn't know if the war was winnable until the review was conducted and completed.
He said if the war was winnable he and the other new directors could help turn the company around.
He said he would take no prisoners.
Mr Chaplin likened the situation to US army general George Patton, armed with pearl-handled pistols and standing on a tank leading an army of misfits during World War II.
Mr George told shareholders the company's ``one Nylex'' restructuring program, announced in May, was well in progress and would produce benefits, including initial annual savings of $5 million, once implemented.
Under the restructure, Nylex will move to a single operating structure as opposed to a divisional structure.
Mr George said in the 2009 financial year, Nylex was targeting a small profit of $5 million at the earnings before interest and tax (EBIT) level, excluding restructuring and one-off costs.
Nylex made an operating loss of $2 million at the EBIT level in the 2008 financial year.
"This is a very significant turnaround,'' Mr George.
Mr George also said state of the Australian economy was of major concern.
"The automotive industry, where we have significant operations and new opportunities, is reducing production volumes across the board,'' he said.
"The rainwater tanks market, even as our new business prospects are improving, remain subdued due to the above average rainfall and previous oversupply.''
"And the building industry looks as though it's heading for a major downturn.''
Mr George said aside from this, the company remained in negotiations to renew its borrowing facilities with its bankers.
He also said early signs of the "one Nylex'' initiatives were positive.
Mr George acknowledged after the meeting that the vote was close.
"I think it's an indication that when your horse is losing, the temptation to change the jockey is very powerful,'' he said.
Asked how long the Nylex board would take to turn things around, he said: "I think the next year will be the critical year.''
Mr George said he hoped Pivotal would not mount another challenge.
"This has been an incredibly distracting and costly process,'' he said.
"I've been around to all of our factories over the last few weeks and everybody in Nylex has been concerned about the ructions at board level.
"I would hope that sanity will prevail.''
Nylex shares were down one cent to 42 cents at 12.32pm AEST, giving it a market value of $21.62 million.
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