Executive Summary: September 19, 2009
By Scott Rochfort | smh.com.au | 18 September
Chew on that...Gerry Harvey turns 70 today.
CBD
Harvey's getting young in the tooth
Harvey Norman's head fridge salesman, Gerry Harvey, will be sporting a new set of fangs when he celebrates his 70th birthday today.
Before heading to the dental surgery yesterday for his new teeth, Gerry remarked that after 37 years as the director of a listed company he couldn't think of anyone who had been around longer than he had.
"I doubt there will be any left apart from me. There may be somebody out there," he told CBD. "You'd be battling to find anyone.
The only other bloke who would be ahead of me ... is Rupert Murdoch. But he doesn't live here, but he would be ahead of me," he reasoned. Gerry should be relieved to know that Frank Lowy listed his Westfield Development Corporation in 1960.
The Harvey Norman boss also appears more enthusiastic than most people on dental procedures. "They are bloody fantastic. Because, instead of false teeth, you've got implants," he said.
As for his movements today, Gerry said: "I wouldn't have a friggin' clue. What I am doing, I do not know."
His wife and business partner Katie has a "very interesting day" planned.
Traffic jam
Con Scrinis is pressing on with his ambitious plans to simultaneously be the managing director of two listed road-sign companies, both called Traffic.
The Melbourne Greek business identity wants to raise $5 million to backdoor-list his road sign and street-sweeping company Traffic Group into the aquaculture company Western Kingfish, which went into administration last year.
Scrinis will host a series of pub investor briefings in Sydney (the Woolloomooloo Bay Hotel), Melbourne, Brisbane and Perth later this month.
At the same time Scrinis is trying to wrestle back control of the company Traffic Technologies of which he was joint managing director until 2007 – with another Con.
He has lobbed a request for a shareholder meeting to depose Traffic's chairman, Ray Horsburgh, and Con Liosatos (aka the other Con) as managing director.
The two Cons were in business together for 20 years before falling out in 2007. "The joint MD thing just wasn't working," explained Scrinis to CBD.
As for his bid to wrestle back control of the old company in which he still has a 13 per cent stake, Scrinis explained: "TTI needs an urgent restructure and clean-up before it's too late. The whole thing's turned to crap."
Scrinis's YouTube video promoting his backdoor listing had attracted 31 views by late yesterday afternoon. His fund-raising track record so far hasn't set the world on fire.
He is yet to raise a cent for the Melbourne Around the Bay in a Day cycling charity event he plans to ride in next month. Scrinis is riding in the Middletons Straight Talkers team.
Middletons happens to be the law firm representing the Traffic company that Scrinis wants to clean up. Hope that all makes sense.
Hanging in there
It might be a fair guess Babcock & Brown Infrastructure will not announce any senior executive resignations this month.
The company, which reported a $977 million loss last financial year, noted in its annual report yesterday that its chief executive, Jeff Kendrew, will pocket $220,000 if he can hang on until September 30.
His chief financial officer, Jonathon Sellar, will also get $200,000 if he can hang in there for another two weeks too, along with three other executives who will get between $165,000 to $175,000 at the end of the month.
No doubt BBI shareholders will be chuffed to know that the near comatose infrastructure concern also managed to cough up bonuses to three of its executives worth $529,905.
The biggest recipient was the chief executive of PD Ports, David Robinson, who pocketed a $296,906 bonus, a generous $116,771 in his superannuation account, and his $476,087 base pay.
Gamblers' den
Just around the corner from the Martin Place offices of the anti short-selling campaigners Macquarie Group and ASIC, the Australian hedge fund industry celebrated its annual awards last night.
The Australian Hedge Fund of the Year award went to Fortitude Capital for the second successive year, for its Absolute Return Trust.
In another moving tribute, the Alternative Investment Management Association (AIMA) honoured the Henry Davis York partner and legal eagle, John Currie, for his services to the local hedge fund community.
Currie is better known in the wider community as the author of the riveting tome Australian Futures Regulation. Other winners included SunSuper as the "Best Investor Supporting Australian Managers".
The awards, hosted at Justin Hemmes's Ivy Bar, help "improve the understanding of hedge funds and their strategies", according to AIMA.
"The event also provides an opportunity for managers to showcase their incredible talent to a global audience," AIMA's local chairman, Kim Ivey, said.
The awards did some good. They helped raise funds for a children's cancer charity, Cure Our Kids.
Loyal to the end
Lion Nathan avoided any potential embarrassment yesterday after passing a crucial vote from its shareholders.
In a test run of the beer maker's fandangled electronic voting system at the company's EGM yesterday, shareholders voted overwhelmingly in favour that Toohey's was the best beer.
The vote was about 92 per cent for Toohey's. Lion's spokesman, James Tait, however, did express some disappointment.
"I thought it would be higher," he told CBD. The vote was less than the 98.75 per cent who voted in favour of the scheme of arrangement for Japan's Kirin to take full ownership of the brewer.
The Japanese beer maker also appears upbeat on the global outlook for beer. The Kirin Institute of Food and Lifestyle declared last month: "Despite an economic recession, global beer production has reached record volumes."
It is unclear how many lifestyle researchers Kirin has.
Foggy diversions
Startled at 5.05am yesterday morning by the sound of a jet, CBD thought it finally had nabbed someone for breaking the curfew at Sydney Airport.
But it was not to be. Sydney Airport's spokesman, Michael Samaras, said the aircraft was diverted over several Sydney suburbs because of fog.
"It didn't take off or land at Sydney Airport," he told CBD.
Perhaps it was fortunate for Macquarie Airports that the federal Transport Minister, Anthony Albanese, who lives at Marrickville, flew out of Sydney on Wednesday night.
"He awoke in Canberra," said the minister's flack, Jeff Singleton.
XChange
Edited by Jamie Freed
Concern over more BBI write-downs
Babcock & Brown Infrastructure has hardly impressed the market by its latest revelation: the likelihood of another $900 million write-down to its asset base, just three weeks after it released its latest accounts.
BBI said the write-down was likely to be necessary if a deal with a cornerstone investor proceeded as planned. This latest disclosure adds to suspicions that BBI was less than frank with the market at its full-year results briefing.
It is now clear that by then BBI had already held at least preliminary talks with the potential cornerstone investor. It also should have been clear by then that the estimated proceeds from its planned sale of PD Ports and Dalrymple Bay would not be enough to repay its debts.
Yet at the results briefing, the company indicated those sales were moving along as planned. A week later, BBI gave the market the bad news about the asset sales and introduced the prospect of a cornerstone investor that could save the company from administration but effectively wipe out ordinary shareholders.
As part of the mooted deal, BBI expects to sell some assets and stakes in assets that have a total book value of $7 billion, but to make $900 million of write-downs. Behind the scenes, BBI is arguing that the asset values on its books as of June 30 had assumed it would be a long-term holder rather than a liquidator.
Therefore, the need for write-downs does not bode well for the prices it is likely to receive. There seems to be little hope that BBI's shares will have any real value after a deal is done, although its EPS hybrid holders may fair a bit better.
Delayed news
Woodside Petroleum and its shareholders appear to have a difference of opinion over what constitutes a material development for the company.
In the past two days, Woodside shares rose 6.4 per cent on speculation and then confirmation that an Anadarko Petroleum-led joint venture off West Africa, in which it holds a 25 per cent stake, had discovered a new oil province called Venus.
Another partner, Tullow Oil, said the new find off Sierra Leone combined with other fields stretching to Ghana could hold 6 billion barrels of oil.
UBS estimated that Venus find alone could hold 250 million barrels of oil, with a value of up to 93c a share for Woodside. Yet although Anadarko trumpeted the news in a 45-minute investor briefing well before the Australian market opened, it took until 12.56pm for Woodside to announce the find.
Perhaps not surprisingly, by then Woodside and the ASX had already had a chat.
BHP shopping list
Recent speculation of a BHP Billiton bid for Alcoa would appear to be almost laughably off the mark, based on comments from its chief commercial officer, Alberto Calderon, at a marketing briefing on Wednesday evening.
He said BHP was willing to grow its own top-tier assets – via projects in Guinea and elsewhere – rather than scour the aluminium industry for potential acquisitions but did not consider it a business with the same sort of potential as coking coal, iron ore, copper, potash or petroleum.
Nickel is notably absent from that list, but Calderon said its Cerro Matoso laterite operation and Nickel West in Western Australia were top-tier assets and even opened the door for picking up more assets of a similar quality.
The notion of BHP as a buyer of nickel assets rather than a seller may surprise many in the market. BHP recently sold its Yabulu refinery to Clive Palmer, who is said to be about to fold it into Gladstone Pacific Nickel.
BHP is also trying to offload the Ravensthorpe mine and plant. In terms of other metals, Calderon – whom Xchange hears will soon be moving from London to Melbourne to be closer to most of his colleagues – admitted that one of the biggest challenges was finding top-quality copper assets.
But he added BHP remained open to taking another look at Zambia and the Democratic Republic of Congo. Meanwhile, UBS thinks a diamond joint venture between BHP and Rio Tinto in Canada has the potential to unlock about $US45 million a year in cost savings.
Toll talks freight
Toll Holdings's boss, Paul Little, may have put ideas about a takeover of Brambles on the backburner but it appears his other aspirations may not be so easily achievable, either.
Macquarie Equities thinks Toll is unlikely to spend more than $400 million on freight-forwarding acquisitions over the next year because of the lack of sizeable targets and the time needed for due diligence.
Little recently talked up his desire to embark on an acquisition binge with its $1 billion-plus war chest, signalling he was interested in a pallet company and smaller freight-forwarding businesses in the US or Asia.
Toll wants to break into the top 10 of global freight forwarders within the next three years by boosting revenue from about $1 billion to $3 billion. That is the kind of growth target only achievable via acquisitions. Other analysts have also doubted Toll's interest in the private equity-owned pallet company Loscam, the nearest rival to Brambles in the Asia-Pacific.
Going for gold
It may be small change compared with the Myer float, but some high-profile names in the mining industry are planning a $6 million listing of Laconia Resources, a WA gold hopeful.
The projects have been sold into the company by Denis O'Meara, who had done the same for Atlas Iron and BC Iron. The managing director, Ian Stuart, is a former geologist and more recently a broker at Macquarie.
The seed investors include luminaries such as David Flanagan of Atlas, the Hardman Resources founder Ted Ellyard and the former Oxiana director Ronnie Beevor.
The 20c a share offer led by Emerald Partners opens on Monday and will close on September 30, with plans for a listing on October 14.
Last word
This is the last edition of Xchange. It will be replaced by a new column, Insider, from Monday.
xchange@smh.com.au
Business Focus
Wanted at Arafura
Shareholders in the rare earths developer Arafura Resources have waved through a $23m deal under which China's ECE can take a 24.86pc stake in the group at what has become a massive discount to Arafura's market price. There was virtually no opposition to the deal from Arafura shareholders at a meeting in Perth yesterday, with the perceived benefits of a strategic alliance with ECE apparently seen to far outweigh any complaints about price. Its shares last traded at $1.19, well above the 30c to 40c paid by ECE.
Soul Patts forecast
Washington H Soul Pattinson has forecast an unaudited after-tax profit of $210m-$230m for the latest year. This was below analyst expectations despite being at least 86pc above last year's $113m after-tax profit. Its full-year results are due next week.
Gorgon gas approval
West Australians will get a slice of the $43bn Gorgon liquefied natural gas project sooner than expected after the competition commission issued a draft decision to allow joint marketing of the gas domestically. The ACCC chairman, Graeme Samuel, said domestic gas production is expected to begin in 2015.
Agreed gold bid
A locally listed PNG gold producer, Allied Gold, is to make an agreed scrip-only bid for Australian Solomons Gold, the Toronto-listed owner of the abandoned Gold Ridge mine in the Solomon Islands. The combination would have a market capitalisation of about $300m and an annual output target from 2012-13 of more than 300,000 ounces, assuming a successful restart of Gold Ridge on Guadalcanal.
Solar power queue
A proposal to build the world's biggest solar power station in Victoria may receive a lifeline with 40 companies expressing interest in buying Solar Systems, the company which went into administration last week.
First published by Smh.com.au on September 18 2009
Visit smh.com.au for the latest news updated throughout the day
