Executive Summary: September 30th, 2009
By Scott Rochfort | smh.com.au | 30 September
Trevor Gerber...playing with aircraft, and raking in fees.
CBD
A nice little earner for an old retiree
Will the recent $30 a week increase in the aged pension be enough for Leighton's former deputy chief, Dieter Adamsas?
Two years on from his "retirement", the 66-year-old has been forced into doing odd jobs at Leighton to supplement the director's fees he gets at the contractor.
On top of the $397,615 payment Dieter pocketed as a "non-executive" director last financial year, Leighton's chief executive, Wal King, has given him some chores to keep him busy.
This helped Dieter pocket an additional $3.56 million in consultancy fees, which was up from the $1.8 million in consultancy fees he collected the previous year.
Wonder what Dieter's replacement, Scott Charlton, makes of it, given his total remuneration was $2.45 million for the year.
Chinese meal
The coalminer Felix Resources has heeded community concerns over executive pay by awarding its managing director, Brian Flannery, a modest 366 per cent increase in base pay last financial year, from $504,587 to $1.85 million.
But do Felix shareholders really care? For one, they might be a little more distracted by the $3.5 billion takeover bid from China's Yanzhou Coal Mining company.
If approved by shareholders, the bid will see Flannery pocket an additional $529 million for his stake in the miner, which includes the special dividend Felix plans to pay.
Even if some shareholders kick up a stink, they are likely to be in a minority at the upcoming meeting.
Felix is 49.4 per cent owned by three of its directors and three management personnel.
The biggest winners from the Yanzhou takeover also includes the "non-executive" director Hans Mende, who stands to pocket $675 million, and chairman Travers Duncan, who will get $536 million. Sadly, the other Felix director, John "Krispy Kreme" Kinghorn, has no shares.
A little limp
It takes a lot to get the market aroused these days. Shares in the biotech Acrux rose only 1c, to $1.61, after it announced positive test results for its treatment which can be applied to the armpits of men.
"The post-treatment changes demonstrated positive responses in sexual desire, sexual activity, mood and general well-being, underpinning the patient-reported benefits of this treatment," the company said.
In the pocket
Valad Property Group (aka Invalid Group) chairman Trevor "Garbled" Gerber does not appear to have heeded the lessons from last year's heated annual meeting – the meeting where Valad shareholders (including the group's founder, Barry Wynne) vented their rage over the bonuses paid to the executives of the imploding company.
This year the executive directors Stephen Day and Peter Hurley have done away with the respective $743,000 and $675,000 retention payments they were given last year.
They even copped a cut in their base pay. Gerber at first sight appears to have also been obliging, as his chairman's fees shrink to $363,000 from $421,000.
But he actually enjoyed a near doubling in his base fees, since the previous year Gerber got an extra $160,000 "for additional time over and above the normal requirements of directors".
Gerber has spent more time recently helping Macquarie Airports' team of "independent" directors "negotiate" the $345 million fee to buy off Macquarie's management rights over the airport owner.
Speech problem
Mining billionaire Clive "Professor" Palmer failed to go by the script yesterday in his speech to the Queensland Media Club titled "Growth, Jobs and Honesty in Government".
The former spokesman for the Queensland premier and peanut farmer Sir Joh Bjelke-Petersen said: "I know today I was supposed to be talking about honesty in government, but I couldn't find any, so I skipped that."
The vocal critic of the Labor Party appears to have more love for the iron-ore loving Chinese Communist regime.
Heavy traffic
The colossal battle between the two Melbourne road sign companies, each headed by a Con and called Traffic, has stepped up a notch.
Con Scrinis, the managing director of Traffic Group, has again exploited the power of the internet to drum up support for the back-door listing of his road sign company (into the former listed fish farmer Western Kingfish) and his bid to retake board control of the ASX-listed Traffic Technologies.
But Scrinis appears to be passing off YouTube videos as breaking television news.
In his latest web appearance, Scrinis is interviewed by the hard-hitting "YouTube IPO reporter" Stephanie Manolas about the "Traffic Technologies Board Stoush". After some probing questions, Con took aim at his former business partner, Traffic Technologies managing director Con Liosatos.
"Over the last two years we've sat back and watched TTI being destroyed by its current management," he told Manolas.
The video clip was posted before an investor presentation Scrinis gave at the Woolloomooloo Bay Hotel last night. But Scrinis's internet efforts have so far yielded little, given he has now delayed his planned $5 million raising.
Got a tip? email srochfort@smh.com.au
Insider
Edited by Jamie Freed
FIRB curb could be bad news for oil and gas sector
There has been plenty of talk in mining circles about the Foreign Investment Review Board's expressed preference last week for state-owned companies to limit investments to 15 per cent or so of major miners and 49 per cent or less of project developers.
But depending on the application, the policy could also have far-reaching consequences in the oil and gas sector, where plenty of cashed-up national oil companies – and not just from China – are interested in Australian assets.
For example, before the uproar over the amount of state-owned investment in the mining sector, FIRB allowed Sinosteel to buy 100 per cent of the iron ore miner Midwest.
In oil and gas it allowed the state-owned Thai company PTTEP to buy all of unlisted Coogee Resources and operate the Montara field that is now leaking oil into the Timor Sea. But FIRB's reaction to a much larger oil deal remains untested.
A few years ago there was talk that China's CNOOC could try to bid for Woodside Petroleum after losing out on Unocal in the US. FIRB's preference for 15 per cent stakes in big companies would appear to rule that out.
Of the other big producers, Santos would also make an interesting test case. There is no shortage of suitors for Santos, but faced with a hostile bid it is likely to turn to its coal-seam gas joint venture partner, the state-owned Petronas of Malaysia, as a potential white knight.
It would be interesting to see whether FIRB would allow Petronas to buy Santos if it lodged a higher bid than a non-government-backed Western suitor such as Shell or BG.
The other big target, Oil Search, is incorporated in Papua New Guinea and is not under FIRB's jurisdiction. Abu Dhabi's International Petroleum Investment Company owns 17.5 per cent of Oil Search, but it has been mooted as a potential target for PetroChina.
There have been no bids for Woodside, Oil Search or Santos since Shell's takeover of Woodside was rejected by the federal treasurer Peter Costello in 2001.
Ironically, one reason for the lack of offers could be that each is so attractive that the first mover is likely to start a bidding war among a host of deep-pocketed global oil producers.
The same could hold true for BG Group, which could be attractive to BHP Billiton but would spark an auction, drawing out even bigger players such as ExxonMobil and Shell.
Private lessons
James Packer's decision to liquidate his 12 per cent stake in Sunland, with help from his usual broker, UBS, has not exactly doused persistent talk that he could seek to privatise Crown.
The shares in the property group were sold to one or more clients of RBS Morgans yesterday at 80c, for proceeds of about $29 million, which compares with an initial $70 million investment at $1.87 a share.
Packer has recently cashed out his stakes in Seek, Challenger Financial Services, Consolidated Pastoral, the 54 Park Street building in Sydney, and part of his interest in Energy World.
The only remaining listed investments are a 12.4 per cent stake in Magellan Financial Group worth $15 million and his 41 per cent stake in Consolidated Media (CMJ) and 37 per cent stake in Crown.
There is little expectation that he will part with his interest in CMJ or Crown, but the market would not be surprised if he sold the remaining 8.3 per cent stake in Energy World and the Magellan stake.
The Merrill Lynch analyst Nathan Gee last week ran the numbers on a potential privatisation of Crown and concluded a deal would have to be done at $10 per share at least. That compares with yesterday's closing price of $8.70. Gee said a $10.30 a share bid would require $2.1 billion of funding from Packer.
That assumes the sale of the Melco Crown Entertainment stake, worth $1.75 billion, and Crown's spare debt capacity of $1 billion would be used to help fund the deal.
All together, Packer has pulled in about $1.35 billion from his recent asset sales.
Capital ideas
Fortescue Metals will need to update the market on the status of its mooted $US6 billion ($6.88 billion) financing deal with Chinese lenders since today was the deadline for an agreement to be struck.
Most are betting on an extension, since very little detailed work is believed to have been done to date despite months of talks. Any update on timing will be interesting in light of Morgan Stanley's recent warning that Fortescue is tight on cash.
China is the flavour of the year for miners seeking cash, but notably it is still possible to raise funds from more conventional sources.
China Nonferrous Metal Mining's withdrawal last week from a funding agreement with Lynas means the rare earths miner is instead seeking $450 million from a rights issue and institutional placement at a 50 per cent discount to the last trading price.
JPMorgan, which first approached Lynas suggesting a plan B funding once FIRB approval did not look guaranteed, will underwrite the issue in return for about $19 million in fees.
The raising should rebalance the register, three-quarters of which was retail before the raising, back toward institutions. Much of the issue has been sub-underwritten.
Lynas has no debt on its balance sheet, but Insider hears many banks shy away from lending to miners active in metals such as rare earths that are not traded in very transparent or liquid markets, having been burnt in the past.
jfreed@smh.com.au
Briefs
Rare Earth
Lynas rights issue Lynas has announced a fully underwritten $450 million rights issue to fund its West Australian rare earths development after the government knocked back Chinese funding for the project. The offer will be undertaken at 45¢ per share and be broken into three tranches, including $88 million to be raised from institutional shareholders, a $295 million entitlement issue and $67 million through a conditional placement. Insider—Page 9
Travel
On the mend The travel agency Flight Centre said yesterday there were signs of recovery in the travel market and its trading results for the first two months of this financial year had been encouraging. It expects a pre-tax profit of $125 million to $135 million for 2009-10.
Grain Exports
Port changes The Australian Competition and Consumer Commission has approved new port access arrangements for the grain handlers and marketers GrainCorp, ABB Grain and CBH. The move should unlock constraints at grain ports and create a more efficient and competitive wheat export marketing industry, the ACCC said.
Construction
US housing hopes Building products maker Boral said a housing recovery in the United States could begin in the second half of this financial year. While job losses in the US were slowing, unemployment's contribution to housing foreclosures was shaping as the biggest factor, it told analysts.
Television
Austar additions The pay TV group Austar is expecting a better second half. It has launched a string of new channels to attract more customers. The company said it was aiming for 750,000 subscribers by the end of this year, up from 728,719 subscribers on June 30.
Iron Ore
Cazaly dismissed Cazaly Resources has again failed to wrest control of a WA iron ore project from Rio Tinto and its venture partners. WA's mining warden confirmed yesterday the validity of the venture's tenure over the Rhodes Ridge deposit in the East Pilbara region.
First published by Smh.com.au on September 30 2009
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