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CBD

From Big Mac to 'who's that burgher?'

The bouncers at Macquarie Group's Martin Place HQ appear to have very short memory spans.

Or maybe just short employment contracts. Macquarie's former chief executive Allan Moss, according to a CBD spy, drew blank stares from reception staff on Wednesday night when he turned up for a dinner being held for private clients of the fee-gouger.

Despite having headed Macquarie for 15 years before his retirement in May last year, we are told staff on the front counter had to look up Moss's name before allowing him to enter his former workplace.

"They didn't recognise him," our gobsmacked informant said. It seems the man who collected a $27.8 million bonus in his last full-year at Macquarie just looks like a regular guy these days.

At the dinner, the Macquarie economist Mark Tierney gave a talk on the recent economic panic and coming technology boom.

When CBD put a call into the silver doughnut yesterday, a Macquarie media spokeswoman said: "We have nothing to add."

Funny that, given her quick response was made before we had time to ask a question.
 
Talk ain't cheap

The 2GB owner Macquarie Radio Network continues to tally the cost of the talking parrot Alan Jones's defamation of the Australian Olympic Committee president John Coates.
 
Having paid out $388,563 in damages (including interest) over Jones's defamation of Coates in relation to an incident at the 2004 Athens Olympics involving the rower Sally Robbins, 2GB has yet to find out how much it may have to pay for Coates's legal bills.

Yesterday it was disclosed $580,654 had already been paid by the AOC to Coates's solicitors. This is nearly triple Macquarie Radio's $222,000 net profit from last financial year.

The company recently noted the lower profit was "adversely impacted by abnormal events", such as a one-off $4.5 million cash payment to retain Jones as its flagship shock jock.

Basic economics

Clime Investment Management appears to have cottoned on to a novel idea.

Apparently it is good when your revenues exceed your overheads.

"We continue to plan for the operating revenue of our company to clearly exceed our costs ... this is one of our primary business targets during the next 12 months," said the group's chairman, David Schwartz, in Clime's annual report.

Clime seems to have a long way to go, its losses ($2.951 million) having been greater than its revenues ($2.897 million) last financial year.

Tatts progress

The walls of gender inequality continue to crumble at "Sydney's premier sporting, social and business club for men", the 151-year-old Tattersalls Club.

Just a month after its members coughed up $3.5 million to replace a debt the club's banker, NAB, had called in, the Tatts has now let a woman in to get things in order.

Katie Kelly has been appointed acting secretary of the club, but only for this week. The Tatts also got around to celebrating its recent financial bailout last night with drinks.

Money's a gas

No wonder the executive chairman of AJ Lucas, Allan Campbell, has a beaming smile in the engineering group's annual report.

Campbell bagged a $6.48 million cash bonus and $614,836 of share-based payments on top of his $505,000 salary last financial year.

The bonus related to the group's sale of its coal seam gas assets in the Gloucester Basin, near Newcastle, for $259 million.

Campbell did not seem to be kidding last December when he said: "We are delighted AGL will be the new owner of this strategic asset."

Joining the bonus bonanza from the coal seam sale was the group's chief financial officer, Mark Summergreene, who bagged $1.3 million on top of his $225,919 salary.

Even the company secretary, Nicholas Swan, joined in to collect a $1.94 million bonus on top of his $222,750 base salary.

The group's oil and gas manager, Mike "thank you very" Much, bagged a $1.72 million bonus, and AJL's head of drilling, Brett Tredinnick, and head of planning, Mark Tonkin, each pocketed a $897,500 bonus.

Not to miss out was the group's head of coal seam gas, Paul Bilston, who was paid a $3 million bonus before resigning in late March. All up, AJL executives pocketed $19.8 million in short-term cash bonuses in the year.

Oddly, the group's general manager for Queensland, Denis O'Brien, also collected a $100,000 bonus for the sale of the NSW coal seam gas deposit.

Except for Mike

One former AJL operative probably not smiling is Mike Rollo.

He served as the firm's "operations group" chief executive for four-and-a-bit months and left in early May. Rollo was paid a $205,289 base salary for his time.
 
He scored a $200,000 termination payment but no coal seam gas bonus.

Right you are

Research by the Melbourne Business School has found that organisations could benefit not by being honest but rather by appearing to be honest.

The school's Professor Karen Jehn has found that in 80 per cent of cases, customers thought they were being lied to when they were in reality being told the truth.

“It's better for the organisation to actually train their employees on how to appear more genuine and reliable so that when they do tell the truth, customers do not misinterpret it," explained Jehn in a press release.

“Looking to the left instigates the creative hemisphere of the brain. The right side is typically considered the more rational side.

This is a clear indicator that police use all the time," she said. Maybe this is something shareholders can be on the lookout for this annual meeting season.

Property people

The expensive game of investment banking musical chairs continued yesterday, when JP Morgan announced it had found some people to help fill the desks vacated by its property team who recently fled to UBS (to help fill the empty desks left by the Swiss bank's real estate team who fled to Merrill Lynch).

JP Morgan's Australian boss, Rob Priestley, and the head local banker Grant Dempsey, in an email to staff yesterday, confirmed the appointment of the Hong Kong JP Morganite Anthony Ryan and the Deutsche Bank real estate co-head Tim Ryan as the new joint heads of its Australian real estate investment banking business.

No word yet if JP Morgan's chairman of investment banking, Andrew Pridham, is heading towards any exit doors. JP Morgan announced other appointments, including the former UBSer Craig Smith to its real estate ranks and the Barclay Capital operative Jay Hipolito as its head of syndicated leveraged finance.

There was even a compliment for Deutsche Bank's involvement in several large real estate deals.

But they all apparently related to Ryan's skills and not his former Deutsche real estate co-head, Hugh Macdonald.

"Since Tim's return from New York two years ago, Deutsche has significantly improved its market share in real estate in Australia," the email said.
 
The former Citibanker Macdonald at least can be comforted to know he is now the sole head of Deutsche's real estate investment banking team.

Got a tip? email srochfort@smh.com.au

 

 

Insider

Edited by Jamie Freed

No brotherly love in deals on PearlStreet

It will be worth watching whether investors in PearlStreet share the same idea of value as its managing director, Anthony Wooles.

The resources services provider this week invited private equity group Catalyst to pump $23 million into it in return for at least a 46 per cent stake in PearlStreet at 50c a share.

Wooles, who currently owns 51 per cent of PearlStreet, agreed to sell 31.5 per cent of his stake to Catalyst as part of the deal. But laboratory testing group Campbell Brothers yesterday raised $197 million with help from JP Morgan and launched a cash bid at 56c a share.

PearlStreet shares surged 25 per cent to close 10.5c higher at 53c. It was therefore a surprise for many investors that the board rejected the offer from Campbell just after the market closed, arguing it was better to remain listed and pursue growth opportunities.

It wouldn't be unexpected if some of the minority investors pressured Wooles to change his mind, given his majority stake gives him the power to control PearlStreet's destiny.

It appears Campbell has already done due diligence on PearlStreet and signed an agreement blocking it from buying a stake on the market, so it will be interesting to see how the situation plays out. Westoz Funds Management is the second-largest shareholder, with 6.3 per cent of the stock.

Bank shopping

Ascendia Retail may publicly be coy about its plans for a $600 million or so potential float, but the Archer Capital-owned business on Wednesday filed paperwork with the corporate regulator to convert itself into a public company.

Myer changed its status to a public company in late August, just one day before it appointed Goldman Sachs JBWere, Macquarie Capital and Credit Suisse as the co-lead managers of its public offering.

Archer will today hear pitches from a long list of investment banks that have approached it over the past few months suggesting the timing is right to float Ascendia, the owner of Rebel Sports.

Boutique Caliburn advised Archer on the $369 million purchase of Rebel Sports in 2007, but if it managed to grab this gig, it would presumably need an investment bank with a large brokerage business to assist.

There is an impression that this selection process is much more open than the Myer and Kathmandu ones, which were pretty much pre-ordained due to longstanding relationships between the companies and particular banks.

Ascendia has yet to file its earnings for the 2009 financial year, but the previous year it reported $40 million of profit before interest and tax.

It is said to have reasonably good growth prospects, but finding the right pricing multiple could be tricky because there are no comparable companies listed on the stock exchange.

The timing of the float remains uncertain, but there is a general feeling that it is likely to wait until the Myer float is priced on October 30 before releasing its prospectus.

After the fox

Macquarie Capital may be a household name in Australia, but in North America it is better known as a boutique shop specialising in resources, energy and infrastructure.

But yesterday's purchase of Fox-Pitt Kelton, which specialises in financial services advice, combined with job openings in the US for analysts and bankers in sectors like media, internet, health care and industrials, shows it is attempting to broaden its reach.

In the past five years – not counting the Fox-Pitt purchase – Macquarie's North American employee base has grown almost six-fold to 1931.

Based on its job advertisements in the US, Macquarie is instilling a similar culture in its overseas offices, seeking employees "willing to work the hours to achieve your goals".

It still remains to be seen whether Macquarie, via bolt-on acquisitions like Fox-Pitt, will ever be able to reach the top tier of the league tables in the US, which even the major European investment banks have found tough to crack.

It will also be important for Macquarie to retain key talent. In Canada, one of the lead mining bankers it picked up through its Orion Financial acquisition, Doug Bell, reportedly quit this week to move to an independent shop.

Meanwhile, Ord Minnett's annual accounts show just how tough it was for brokers in the financial year ended June 30.

Its revenues fell 36 per cent to $68 million compared with the previous year, and profit fell 80 per cent to $2.26 million, even though it cut costs by 28 per cent.

NAB'S odd bid

National Australia Bank's British business has not exactly been a great performer of late in light of the dismal state of that economy.

In fact, many investors expect NAB will eventually exit that business to focus on its more profitable Australian operations.

So the local market was certainly puzzled yesterday when London's Telegraph reported NAB was preparing a £6.9 billion ($12.56 billion) takeover for life insurer Legal & General, which is the equivalent of AMP in that market.

The rumours seem to have been sparked by an initial suggestion that L&G was preparing to defend itself from a well-known insurance raider, Clive Cowdery.

AMP has also been mooted as a buyer of L&G, but that would raise serious questions about its strategy in light of its earlier disastrous foray into Britain which almost broke the company earlier this decade.

jfreed@smh.com.au

 

Briefs

Manufacturing

Growth continues Activity in the manufacturing sector increased for the second month in a row in September to the highest levels since December 2007, the Australian Industry Group said. While good news for the economy, it also increases chances of interest rates being raised by the Reserve Bank.

Aviation

Perth fundraising Perth Airport has completed its refinancing by raising $740 million through new debt facilities, with shareholders committing a further $142 million. The funds will be used to refinance existing debt and meet the airport's planned capital expenditure program over the next three years.

Wealth

Sylvastate decline The listed investment company Sylvastate has posted an 87 per cent decline in after-tax profit to $532,000 for the 12 months to August 31, after its investment portfolio generated a flat return and accounting rules forced it to record impairment charges against falling stock prices.

Tax review

Personal savings A panel reviewing the tax system is weighing up whether or not personal savings should be taxed, a conference has heard. The Treasury Secretary, Ken Henry, said the personal capital income taxation system had evolved into something that was far from the "originally intended ideal".

Perilya

Mine reopens Production is expected to resume at Perilya's Broken Hill lead and zinc mine in NSW after a power outage caused by dust storms on September 21 led to mining being suspended.

Energy

Hot rock hopes Up to 1 million homes could be powered by Hot Rock's geothermal project near Warrnambool if recent results prove correct.