Orchard investors want Macek's scalp

In a strongly worded letter, investors Curt Roberts, Hans Sprangers and David Minear have also called on Orchard's deputy chairman David Spruell and acting chief executive Chris Thiris to resign from the board.

The Melbourne-based Orchard's Office Fund and Diversified Property Fund, and the management vehicle itself, are heavily indebted and have been looking for a white knight for more than a year. Orchard hit trouble in April last year when it faced a deadline to repay about $415 million to its bankers.

There are about 15,000 investors in Orchard and in the group's 2010 annual review Mr Macek acknowledged questions about "the ability of the group and its funds to operate as going concerns without the support of their financiers".

It holds about $19 million in gross bank debt and two weeks ago Mr Macek confirmed that directors had reached agreement to extend the Orchard Diversified Property Fund's loan facilities of about $378 million with NAB and BOS International until February 28.

Since July, when then chief executive David Hinde resigned, the group has fielded many rescue offers, including from the former Babcock & Brown's Robert Topfer's Taemas Capital, backed by British billionaires Simon and David Reuben, and the Cromwell Property Group, which won the support of the board last year but was later knocked back by Orchard's bankers.

The groups offered to inject up to $100 million into the company.

Mr Macek, who sits on the Wesfarmers board and is currently overseas, last week proposed to investors the latest deal with Sydney Barwon Investments, but that too has raised the ire of the disgruntled shareholders.

The shareholders said the Barwon deal diluted earnings for Orchard investors and should be rejected. Mr Roberts, Mr Sprangers and Mr Minear, all of whom have served on the boards of public companies, have grown increasingly disillusioned with the Orchard leadership in the past three years.

Collectively the three have about $2 million invested in Orchard and its funds. Mr Roberts said: "The dark-room development of the Barwon proposal was the last straw.

"We believe that the Barwon deal is a last-ditch run for the door by Macek, hastily proposed, and it is being promoted in an air of desperation.

"We decided to lodge a notice for an extraordinary general meeting to remove these directors who we believe have been derelict in their duty."

Given the anger from unitholders, shareholders and advisers, Mr Roberts said they canvassed other shareholders to gauge their reaction to the Barwon plan.

Mr Sprangers said the company's direction needed to change.

"Funds management is about investment management and stakeholder relations; Orchard have failed in both areas," he said.