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CBD

Bank sits tight on photocopier bills 

The Bank of Queensland has showed it is in no way trivialising its perceived involvement in the $3 billion Storm Financial collapse.

Bank representatives failed to appear at the Federal Court hearing on the matter in Brisbane yesterday, due to a squabble over photocopying costs.

Apparently it does not want to foot the bill (estimated to be in the thousands of dollars) for photocopying client files that have been requested by Storm's liquidator, Worrells.

Meanwhile, Worrells has been asked to show some compassion to Storm founder Emmanuel Cassimatis's defence team, and provide access to the photocopier hired by the firm to copy documents submitted to the court.

"Perhaps you could supply your own paper," Court Registrar Heather Baldwin suggested to Cassimatis's lawyer.

Winging ticket 

Corporate jet travel comes in handy when you run a company on the verge of collapse. Take the Terry Peabody-chaired liquid and solid waste collection company Transpacific Industries.

Despite breaching the covenants on its debt facilities and reporting a tidy $237 million loss last financial year, Transpacific upped the fees it paid to the private jet charter outfit owned by Peabody last financial year from $252,411 to $446,493.

Obviously the use of the Dassault Falcon 2000 EX proved invaluable to Peabody and his team, given Transpacific in its annual report notes how it was used to fly company executives "in connection with the acquisition of businesses, bank negotiations and investor relations".

It is unclear if Transpacific'ssuffering shareholders will see it as a prudent use of company funds. Wonder what Transpacific's new cornerstone investor and private equity white knight Warburg Pincus makes of it?

The Peabody-owned Brenzil Jet Charter notes its $30 million Falcon, is "without doubt the most sophisticated aircraft available in Australasia".

Maybe it is handy to have a private jet to stay ahead of debt deadlines. Transpacific, however, did not use Peabody's 100-foot pleasure boat, the MV Whistler.

But it did help Peabody out with some of the cruiser's paperwork. On June 30 it was still owed $70,016 in relation to the Whistler.

There was also a "small amount" of administrative work for Peabody's New Zealand winery, Craggy Range, which owed Transpacific $286,593 at the end of the year.

Fees up

It is also touching to see Peabody, who saw his stake in Transpacific diluted after an emergency $800 million capital raising, had a few extra beans thrown his way.

His chairmanship fees rose from $816,374 to $833,366. Transpacific's chief executive, Trevor Coonan, saw his base pay packet swell an impressive 13 per cent to $874,017.

Peabody also has a novel way to describe the performance of a company that has seen its share price collapse.

"In these tough times, it goes without saying that our people have played a major role in our continued success," he says in the annual report.

Chook fever 

The David Jones chief executive and Sydney Roosters director Mark McInnes has proved he can match his overly upbeat rival Myer in the optimism stakes.

Despite his rugby league team finishing bottom of the ladder, McInnes yesterday was hopeful the Chooks would be vying for another premiership within the next three years.
 
"We've handed the reins to an experienced coach who's done it all before," said McInnes about his team's new master, Brian Smith. But McInnes did concede he was still sporting a few emotional scars.

"Somebody left a wooden spoon on my car, under the windscreen wipers with a handwritten [note] 'Roosters 2009 wooden spoon'," he said.

"So that didn't feel too good ... the good thing about that is that when you are rock bottom the only way is up."

Other Roosters tragics include the car salesmen Nick Politis and Rick Damelian, Wizard founder Mark Bouris, Southern Cross Equities chairman Brent Potts and former Amazing Loans shareholder and plastics maker Clem Tacca.

As for the DJs boss's interest in the forthcoming float of his nearest rival, McInnes said: "I am definitely not going to be buying any Myer shares."

Cab apples 
 
Meanwhile, spotted in the food hall of the David Jones Market Street store: a fruit hamper addressed to a Reg Kermode, care of Cabcharge in East Sydney. "Looks like someone is trying to raise his spirits," suggested our CBD department store spy.

ANZ on deck

The ANZ chief executive, Mike "007" Smith, appears to have his foreign policy priorities in order.

Skipping the over-hyped G20 meeting in Pittsburgh, Smith jetted into Hong Kong yesterday morning to speak at the same investment group conference attended by the aspiring US presidential candidate Sarah Palin.

For his speech at the CLSA conference, following Palin's, Smith gave a record 100-slide Powerpoint presentation.

In all, Smith had seven meetings in Honkers and even met an unusually friendly CLSA (and former JP Morgan) banking analyst, Brian Johnson.

Smith will infiltrate mainland Chinese airspace this weekend to attend the impressively named Chongqing Mayor's International Advisory Council. Smith will then venture outside Chongqing to open a new ANZ rural bank in Liangping on Monday.

So powerful was Palin's speech, that it seemed to shock even The Independent's Beirut-based correspondent, Robert Fisk, who has witnessed his fair share of traumatic events over the past 30 years.

"Grotesque, unprecedented, bizarre, unbelievable," was how he described it.

Young restless 

Speculation was firming yesterday that the Royal Bank of Scotland operative Peter Young was to replace Trevor Rowe as chairman of the Queensland Investment Corporation.

Coffey flavour 

The former restaurateur and chief executive of Suncorp Metway John Mulcahy has made a triumphant return to the corporate sector.

The consultancy firm Coffey International announced yesterday Mulcahy would be joining its board as a non-executive director.

The Coffey chairman, Stephen Williams, could barely contain his excitement. “John brings a depth of corporate experience in financial and property investment services and knowledge spanning a range of sectors," he said.

Mulcahy's comments, meanwhile, were eerily similar to those he made before he joined Suncorp.

"I am confident that my skills and experience complement those of my fellow directors and I look forward to working with them to drive organic company growth and responsibly increase shareholder value.”

Before Mulcahy joined Suncorp in 2003 he blurted: "I am looking forward to playing a role in continuing the company's strong track record, building the franchise and growing returns to shareholders."

In his six years at Suncorp, Mulcahy helped grow the share price from $10.16 to $4.71.


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

 

 

Insider - opinion analysis

Edited by Jamie Freed

Majority control or bust: why the Lynas deal fell over 

Chinese lenders may be known for providing debt at what Westerners would deem uncommercial rates, but it seems that when it comes to security over assets, they often take a stricter stance.

One of the key reasons that China Nonferrous Metal Mining's (CNMC) bid to buy 51 per cent of rare earths miner Lynas fell over was its unwillingness to cut the proposed ownership to below 50 per cent.

Insider hears that majority control was a crucial condition of CNMC's financing package. Perilya's Chinese investor Zhongjin secured majority control of the Broken Hill zinc miner earlier this year despite the Government's preference for 49 per cent stakes.

That was key to Zhongjin because it allowed it to consolidate Perilya in its accounts. But at the time, Perilya was on the brink of administration with hundreds of jobs in Broken Hill at stake.

Perilya, with help from Zhongjin, has since obtained low-interest loans from the Bank of China's Sydney branch. Industrial and Commercial Bank of China yesterday said it was also looking to lend to Australian miners.

At least those with "Chinese strategic partners". Fortescue Metals already has a Chinese partner in Hunan Valin, but it has yet to finalise a $US6 billion ($6.86 billion) debt package with Chinese lenders before a supposed September 30 deadline.

It seems very little work has been done in recent weeks and, despite months of talks, the lenders have yet to even start due diligence.

Returning to Lynas, the well-publicised FIRB issues and delays are likely to prove a blessing in disguise. Lynas has raised its profile exponentially in recent weeks and its shares last traded at 90c, compared with the proposed 36c price of the placement to CNMC.
 
It is now well placed for a more conventional financing package for the $300 million or more need to complete its project, which may include a sizeable equity raising.

Road show

Myer, which is planning to release some long-awaited details on its float when its prospectus is filed on Monday, is not the only Australian department store embarking on a global roadshow in coming weeks.

The David Jones boss Mark McInnes and finance director Stephen Goddard will soon head to New York and Edinburgh for JP Morgan's annual Australian showcase, and they are expecting plenty of questions about his soon-to-be-public rival.

Notably, McInnes definitely didn't ignore what he called "the elephant in the room" yesterday. In his presentation to investors, McInnes laid out plenty of comparisons between the stores.

A few of the claims about trading in their respective Melbourne city stores and their relative sales performance in Doncaster are understood to have made the Myer folks grumpy.

However, they have created so much hype around the Myer float that it is only natural for a consummate salesman like McInnes to portray his company in the best possible light.
 
The real disappointment yesterday – one that sent DJs shares down 3.9 per cent – was the lack of a profit upgrade. There were conspiracy theories that McInnes deliberately kept the forecast low to make potential investors in Myer think twice before piling into a high-priced float of that business.

But DJs has been notoriously conservative with its guidance and has a well-trodden reputation for underpromising and overdelivering – so much so, that much of the market has calculated it into its forecasts.

McInnes won't rule out a profit upgrade, but he understandably wants to ensure Christmas trading is strong before making a final call.

Tatts confident 

Tatts Group's confidence that it will emerge the winner of the NSW Lotteries sales process does not appear misplaced once the numbers have been crunched.

The Merrill Lynch analyst Nathan Gee agrees Tatts is in pole position to make the $500 million purchase, despite competition from Tabcorp, Intralot and others.

Tatts existing lottery footprint in Victoria, Queensland, Tasmania and the Northern Territory would offer it an advantage over other bidders in terms of cost savings.

Gee estimates that of the $70 million a year of controllable costs associated with running the business, Tatts could strip out $30 million while the others would save $10 million to $15 million.

However, those cuts are likely to take time because existing employees have been guaranteed three years of job protection if they choose to move to the private sector after the sale.

UBS still on top

There were only eight days between updates to the Dealogic investment banking league tables, but the recent spate of raisings by the likes of AWB, Valad Property Group and Primary Healthcare means there has already been movement at the top of the fee-take ladder.

While UBS remained the dominant player in core investment banking revenue, with $241 million so far this year, or a 17.6 per cent share, Deutsche Bank overtook Macquarie Capital for the number two slot, with $168 million.

Macquarie was a very close third with $167 million.

However, those figures did not include the sell-down of CanWest's $680 million stake in Ten Network which Macquarie snared yesterday, so those rankings are likely to be very short lived.

jfreed@smh.com.au

 

 

Briefs

Property

Multiplex move  The Takeovers Panel has ordered a corporate agitator, Nicholas Bolton, to withdraw his bid for the Multiplex Prime Property Fund. However, the fund will proceed with a meeting on October 7, for which Bolton has lodged several resolutions that include the winding-up of the fund and the appointment of a new responsible entity. Mr Bolton's Australian Style Investments owns about 20 per cent of the fund.

Mac group

Minogue departure Macquarie Group's top risk officer has announced plans to retire at the end of November, suggesting the investment bank has started to put behind it a year where it was sorely tested by the financial crisis. The retirement of Nick Minogue after 10 years as the bank's head of risk also highlights the continued overhaul of top executive ranks since Nicholas Moore took charge last year.

CSR reshuffle

Sindel takes helm Jerry Maycock will retire as chief executive of CSR once a demerger of its sugar operations is completed next year, with Rob Sindel, from the building products business, announced as his successor. Ian Blackburne will continue as chairman of CSR, while Ian Glasson and Richard Lee will be the chief executive and chairman of the new sugar and ethanol business.

Aviation

Mind the gap The Global Airports group has filed a court application seeking access to Macquarie Airports' books as well as further disclosure from MAp's independent directors about the risks to debt covenants posed by the internalisation plan. MAp security holders are scheduled to vote next week on the group's plan to buy the management rights from Macquarie Capital Ltd for $345 million.

Mining

Up there Cazaly Shares in Cazaly Resources rose after the junior gold and iron ore explorer said it would raise up to $4 million through a proposed placement to an unidentified Chinese company.

Rresources

Boart raising Shareholders in the drilling contractor Boart Longyear have approved key parts of a $730million capital-raising that will be used to extinguish the company's debt.