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Armoyan takes Holloway REIT's board to task Add to ...

George Armoyan, the aggressive activist investor with a reputation for fixing troubled income trusts, is at it again.

After staying out of the limelight for a couple of years, he is now trying to oust three independent trustees at one of his small investments - the Halifax-based hotel company Holloway Lodging Real Estate Investment Trust.

Royal Host REIT, which owns about 20 per cent of Holloway shares and is chaired by Mr. Armoyan, has requisitioned a special meeting of Holloway unitholders to replace the board members with Royal Host nominees.

Holloway is not the Ritz. It owns 22 "limited service" hotels, mostly in small markets such as Fort Nelson, B.C.; Slave Lake, Alberta; and Truro, Nova Scotia. Royal Host is slightly more upscale, with 31 hotels across Canada including some Travelodge, Best Western, Hilton and Ramada properties.

Holloway is not performing well enough, Mr. Armoyan said in an interview, and he wants to have "input into the direction of the company." The current trustees resisted his earlier attempts to get on the board, he said, but he hopes they will change their minds so it is not necessary to get into a proxy battle. He said he has no immediate plans to press for changes in management.

The three new board members would include Mr. Armoyan, Michael Rapps, an investment manager at one of Mr. Armoyan's holding companies, and John Carnella, an experienced hotel industry manager who was once CFO of Fairmont Hotels.

Mr. Rapps, who is handling the board fight for Mr. Armoyan, said Tuesday that Holloway has a series of debt issues coming up for refinancing in the next two years, and "we are not confident in the board's ability to deal with [them]" The company has also made some poor acquisitions that have hurt unitholders, he said.

Holloway did not respond to requests for comment, but said in a statement that its board of trustees is "reviewing the requisition and will respond in due course."

In the past decade, Mr. Armoyan has taken control of more than a dozen faltering but asset-rich companies - often income trusts - buying up shares, taking seats on the board, then in some cases selling the companies off after engineering a turnaround. Usually he held positions through one of his holding companies, Geosam Investments Ltd., or Clarke Inc.

In the mid-part of the decade Mr. Armoyan was so successful that investors started buying up companies where he had taken positions, pushing up prices in what became known as the "Armoyan effect."

Not all of his moves have proved to be winners, however. He bought into Quebec furniture maker Shermag Inc. in 2006, but attempts to turn it around failed, and it went into creditor protection in 2008. A much diminished company was sold off in 2009.

Mr. Armoyan said he was hurt by the recession and will now only "very occasionally" get into a public battle over a firm's direction. "There [are] some scars still from 2008 which will take a long time to heal," he said. Age has also mellowed him a bit, he added. "I'm 50, so I'm more mature now."

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