Executive Summary: September 10, 2009
By Scott Rochfort | smh.com.au | 10 September
Ralph Norris...struggling through the financial crisis.
CBD
Falling down on the town
The chief beancounter of the listed IT security concern Nexbis Limited, Peter Dykes, had more than a hangover to deal with following a big night at the Cross.
Dykes, 40, was slapped with a 12-month good behaviour bond this week, after a magistrate in the Downing Centre Local Court said his conduct in an incident that involved a taxi driver was "appalling".
According to police, Dykes was with some companions on Bayswater Road at Kings Cross on April 29 when they hailed a taxi to take him back to the Westin hotel on Pitt Street.
On the way, the taxi driver had to push the heavily intoxicated Dykes, slumping from side to side, into an upright position.
The cabbie was concerned that Dykes could lean on him and cause the taxi to collide with another car. When the taxi arrived at the Westin, the driver, Muhammad Iqbal, tried to open the passenger door and wake Dykes.
Police say Dykes then walked off without paying the $12.55 fare.He slapped the driver, who attempted to get him to pay the fare, and tried to strike the driver several more times. Police arrived at 1.40am to find Dykes lying on the ground. He was apprehended and put in a caged police vehicle.
An ambulance was then called and Dykes was sent to hospital for observation. The next day he refused an electronic interview because he did "not remember anything about the night".
Nexbis's chief executive, Johann Young, offered a character reference, but said Dykes would have to resign from the company if convicted. The bond means Dykes has escaped any criminal conviction and will keep his job, which last year paid him $405,850 (including a $250,000 bonus).
Nexbis was formerly known as Entertainment, Media & Telecoms Corporation and listed by Tricom Equities in April 2000. The company's mission statement in its last annual report: "Our vision is to become a trusted partner to governments worldwide in their pursuit to create a safer world for their citizens."
At least it had some good news on Friday when Standard & Poor's said the company would be included in the S&P/ASX 300 Index from late this month.
Highway to Howard
It is not the first time a senior executive of a listed company has been served with a good behaviour bond.
The chief executive of the retractable syringe concern Unilife, Alan Shortall, was handed one after he successfully appealed a six-month jail sentence.
Shortall was nabbed after being clocked driving 231 km/h in a 2004 Bentley Continental GT down the Federal Highway on his way to Canberra in 2005. According to one TV news report, he was on his way to a dinner with the then prime minister, John Howard.
Storm has silver lining
Commonwealth Bank's chief knight, Ralph Norris, has felt the full force of the economic crisis.
His total remuneration rose from $8.7 million to $9.2 million ($NZ11.4 million) last financial year. And his base pay for the year went from $3.1 million to $3.3 million as his bonuses also took a hit.
The chief's long-term incentive was steady at $1.2 million and "performance rights" went from $1.3 million to $1.94 million. At least the CBA board took a hard line on the series of crises that occurred under Sir Ralph's watch, such as the exposure of the bank's dodgy lending practices following the collapse of Storm Financial.
The directors' report notes that the CBA board "also took into consideration events that have had a negative impact on the group in finalising the CEO's STI [short-term incentive] award for 2009". Sir Ralph's short-term incentive fell from $1.9 million to $1.7 million.
The assessment included factoring in the bank's "core behaviours" and "customer service levels". Nevertheless, Sir Ralph is now earning about eight times more than he did as Air New Zealand's chief trolley dolly.
At least CBA's chairman, John Schubert, found some consolation after missing out on the BHP Billiton chairmanship to Jac "The Knife" Nasser. His pay went from $741,748 to $790,491.
Colonial First State Global Asset Management's chief exec, Mark Lazberger, pocketed $5.9 million for his 10 months in the job. He started days before financial markets took a hit from the fall of Lehman Brothers.
Good to see he still pocketed more than $5 million in bonuses on top of his $615,611 base pay.
His and hers
Best court listing of the week: Her Tribe Investments Pty Ltd vs His Tribe Investments Pty Ltd.
Queer honour
Former MFS, Allco Finance and City Pacific auditor KPMG has bounced back from its troubles to claim the honour of international corporation of the year from the International Gay and Lesbian Chamber of Commerce.
In a media release dispatched to CBD yesterday, KPMG declared it was honoured to have won the gong. "KPMG has long been committed to making our organisation a great place to work and nurturing careers," one of the firm's partners, Liz Forsyth, said.
Must have been one hell of an after-party. The award was announced in Copenhagen in late July. The audit firm also boasted its launch of what it calls KGEN – KPMG's Gay, Lesbian, Bisexual and Transgender Employee Network. But a KPMG spokeswoman conceded the firm was yet to become a member of the Sydney Gay and Lesbian Business Association.
It also appears the firm has yet to jump aboard and help sponsor the Sydney gay community's main corporate business networking event: Fruits in Suits. The monthly event, which attracts up to 300 business people, is looking for a sponsor.
Back to school
The chairman of Infrastructure Australia, Sir Rod Eddington, finally appears to be on the front foot in addressing the country's transport needs. The former Allco Finance director will be part of a "transport forum" this morning at Preston Girls Secondary College in Melbourne. He will also take on the Preston Girls' debating team.
Business Focus
Fiji carrier up in air
Qantas Airways confirmed it could sell its stake in the Fijian airline Air Pacific as it seeks to add flights to the South Pacific nation by its Jetstar discount carrier. Ownership of the 46 per cent holding was "formally under review," a spokesman for Qantas said. The Fijian Government owns 51 per cent of Air Pacific. Jetstar wants to fly to Fiji from April.
Liquidators replaced
The Queensland Supreme Court has appointed new liquidators for beleaguered fund manager Octaviar. The Public Trustee of Queensland, supported by the Tax Commissioner, sought to have liquidators John Greig and Nicholas Harwood replaced. The court agreed to the request yesterday. The new liquidators are William Fletcher and Katherine Barnet from Bentleys Corporate Recovery.
Sino Gas listing
Investors have snapped up shares in Sino Gas & Energy Holdings before the company's listing on the stock exchange next week, although the proceeds raised fell short of its original target. The offer, together with a rights issue to existing shareholders, raised $7.9 million through the issue of 31.6 million shares at 25c each.
Goodman raising
Industrial property trust Goodman Group said it raised $1.3 billion through its entitlement offer. The retail component of the offer closed on Wednesday and raised about $355 million.
Xchange
Edited by Jamie Freed
Paladin fund-raiser stocks the armoury
Paladin Ennergy has made it clear the $413 million it is seeking from institutions is earmarked for acquisitions rather than a balance sheet fix, so now the market is pondering what it could buy.
The non-underwritten bookbuild, led by UBS and RBC Capital Markets, had an initial range of $4.45 to $4.70 but appeared to be firming to between $4.55 and $4.65, compared with Paladin's last closing price of $4.90. Retail shareholders might be disappointed there is no share purchase plan.
Paladin owns 19.3 per cent of an Australian and Namibian explorer, Deep Yellow, and 19.9 per cent of a Niger explorer, NGM Resources. Deep Yellow shares rose 18 per cent and NGM shares rose 8 per cent yesterday, giving them market values of $348 million and $29 million respectively.
Unless it wants to enter a bidding war, Energy Metals would appear to be a less likely target. Paladin has a 42.1 per cent stake in its Bigryli joint venture in the Northern Territory, but a Chinese group made a friendly $85 million bid for 70 per cent of Energy Metals on Tuesday.
In past takeover bids Paladin has typically used its scrip rather than cash, so some analysts think it could make a scrip bid for a company and put its newly raised cash towards the development of the target's projects. A bigger merger involving its closest rivals, Uranium One or Denison Mines, would be complicated by the Japanese and Korean groups that hold cornerstone investments in them, and those moves would require much more firepower than Paladin was raising yesterday.
Paladin has plenty of projects in Africa and Australia and has always held ambitions to expand elsewhere in the world, so it could be looking further afield in eastern Europe and the Americas. There has long been speculation that Paladin could make an attractive purchase for Canada's Cameco, and so it is notable that Paladin did not follow Uranium One and Denison and raise cash from a cornerstone holder like an Asian utility.
Paladin's chief executive, John Borshoff, bragged to analysts last week that his company was the only non-aligned pure uranium producer in the world, so he clearly sees value in remaining independent at this stage.
Testing the waters
The market will be keeping a close eye on the trading in Carsales when the new float hits the market at 11.30 am today under the code "CRZ".
It marks the first real test of the market for sizeable initial public offerings this year and could provide an indication of the reaction to Myer's likely float. Myer has told the corporate regulator it will start the pre-registration process for its offering tomorrow, alongside its results briefing.
But it noted that those who initially indicate interest are not obliged to subscribe for shares when a prospectus is released, likely at the end of the month. The $163.8 million Carsales offering, led by Macquarie Capital, was priced at $3.50, giving it a market value of $811.8 million upon listing.
PBL Media will retain its 49.5 per cent stake in the company. Since the offering was priced in mid-August, shares in fellow internet businesses Wotif and Seek have risen by 16 per cent and 21 per cent respectively, indicating Carsales should trade at decent levels.
Elsewhere in the online world, Flight Centre has indicated it may drop its online booking fees of $16.95 in reaction to last week's decision by Expedia and Zuji to axe the charges. That could leave Webjet in a fairly lonely position – one that some in the industry call "uncompetitive" – seeing it said on Friday it had no intention of following the move.
Webjet also took the opportunity to clarify that booking fees account for "only" 58 per cent of its gross income. Webjet shares have fallen 9 per cent to $1.58 since Expedia and Zuji cut their fees.
Murdoch in the wings
There is no shortage of talk about corporate activity in the media sector.
Although James Packer and Kerry Stokes are the ones behind the intrigue at Consolidated Media (CMJ), Citi reckons News Corp would be prepared to enter the battle over pay TV if that is needed to protect its position.
Citi thinks News would be worried about Seven gaining control of CMJ, as that would give it a stake in pay TV and Fox Sports as well as free-to-air, which it could use to its advantage, in tandem raising the cost of content for Foxtel and Fox Sports.
In that situation, News could face the loss of 2.4 per cent of its earnings. One alternative would be for News to make its own bid for CMJ and for Foxtel to buy Austar, which would lead to a 9.6 per cent boost to earnings for News at a total cost of $3.7 billion.
Elsewhere in media, some familiar with Macquarie Media have played down the idea it is looking to raise cash – particularly since it has been buying back shares. But there is talk it may be looking to unwind its complex structure by separating its Australian and US assets. As Xchange noted last week, there have also been suggestions Macquarie Media could look to structure a deal to buy CanWest's $688 million stake in Ten.
If CanWest's bond holders force a sale of Ten, it could also be sold down to institutions or even to a private equity group like Blackstone, which was said to be prepared to pay a maximum of $2.80 a share for the stake a few years back. Ten shares last traded at $1.30.
FKP on the go
FKP Property Group has been the centre of attention in the property market in the past week, with the price rising about 13 per cent on sizeable turnover. It has risen from a low of 21c in March to close at 77.5c yesterday, but remains a long way off the $5 that Lend Lease offered in June 2008.
There has been speculation that its 25 per cent owner, Malaysia's Mulpha, which recently raised $117.5 million, could use the proceeds to take outright ownership and sell the FKP retirement arm to Stockland. Stockland owns 15 per cent of FKP and has first right of refusal over the FKP retirement assets.
xchange@smh.com.au
First published by Smh.com.au on September 10 2009
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