• Home
• »
• Radar

• Home
• Executive Jobs
• Features
  • Focus
  • Career Couch
  • Radar
  • Water Cooler
  • Insight
  • Podcasts
• Place an executive ad

CBD

How do you solve a puzzle like Octaviar 

The company secretary of Octaviar (aka MFS Limited), David Anderson, must have had some sympathy for administrators of the Gold Coast financial group when they came on board last year.

Just two months before Deloitte was appointed the voluntary administrator of Octaviar in September '08, Anderson set up a firm called Business Puzzle Solutions Pty Ltd.

Maybe the former chief financial officer and right-hand man of MFS founder Michael King realised the tough job any corporate undertaker faced in untangling the complex maze of relationships the company had with its former satellites and other related parties.

In helping Deloitte work out the puzzle, Anderson stayed on board and allowed Business Puzzle Solutions to provide services, collecting about $1 million in fees along the way.
 
In a tell-all interview with CBD, Anderson said: "You should speak to the administrators. I think you are making the assumption that I am the only person whose services are paid for through that [entity]."

Anderson declined to say how many people were paid through Business Puzzle Solutions, for which he is the only director and shareholder. CBD: How many people are paid by Business Puzzle Solutions?

Anderson: Anything do with this and the payments of the administrators, you should ... speak to the administrators. "Speak to them," the former KPMG partner confided to CBD.

In MFS's final annual report Anderson, who joined the firm in 2002, is referred to as "responsible for treasury and financial structuring roles throughout MFS, oversees the financial reporting and taxation functions and assists in investment banking projects".

Political spin

The former Labor powerbroker Laurie Brereton was never shy in Parliament about voicing his views of the despotic military rulers of Burma.

"Like the South African government at the time of apartheid, Burma's military rulers should be treated as a pariah regime," the former federal member for Kingsford Smith said in 1999, when he was opposition spokesman on foreign affairs.

Brereton urged the Howard government of the time to "actively discourage" Australian companies from doing any business in the repressive state. Ten years on, he is providing services to the Hong Kong stevedore Hutchison Ports.

"I gave them strategic advice for entry into the Australian market," he told CBD.

The ports operator, headed by the Hong Kong billionaire Li Ka-shing, has operations across the world.

In Burma, the Hutchison-operated Myanmar International Terminals at the port of Thilawa handles 90 per cent of the nation's maritime trade. But Brereton says there is no conflict between him working for Hutchison and his past views.

"I have many concerns about Burma in so many respects, but certainly I am not involved in any operation of theirs in respect of Burma, or Jetstar in respect of Burma, or any other company in respect of Burma," he said.

Sadly, it appears the sway he had in opposition no longer counts. "Well I am not able to discourage Hutchison. My comments then were in relation to Australian companies operating in this area.

"I certainly have no influence over Hutchison in terms of their operations in Burma. None whatsoever." Asked if he had any problems with Hutchison working in Burma, Brereton said: "Quite frankly, no." But it is good to see that he has retained his tough line.

"If I were asked to work on any project in relation to Burma I would certainly avoid it," he said. Brereton also pointed out that last Thursday's CBD column, which referred to him as a "lobbyist" and birthday guest of the former TV executive Sam Chisholm, was incorrect.

He stressed he had never attended "any meetings or made any representations to any government in respect to any tender process".

"I am not representing a company. I am doing strategic planning for a company," he said. Obviously, lobbying and strategic planning are completely different.

Splitting hairs

The Qantas chief executive, Alan Joyce, will have many things to count in addition to the passengers boarding his aircraft this Christmas. Just before taking on the top job at the Flying Roo last year, Joyce was asked by his niece Laura how he would be different in a year's time.

His brother Anthony said he was going to have many more grey hairs, which prompted his niece to start counting Uncle Al's greys.

"I will get her to do a new count in December and see if it's real, because she will be back in December," said the Irishman, who marks his first year in the job next month.

If ever a year was guaranteed to turn an airline executive grey, it was the past year. "I think it's been a very interesting year.

There have been a few things that made it very challenging in terms of the environment," said Joyce, who has had to deal with a swine flu pandemic, an economic crisis, an industrial relations dispute, a senior management overhaul, a 787 delivery delay and a $500 million capital raising. And the upcoming Qantas annual meeting will probably create a few more grey hairs.

Bad smell
 
It seems the Australian Securities and Investments Commission thought there was something fishy going on with trading in Sam's Seafood shares four years ago.

The corporate regulator alleges Noel Stephenson, of Pymble, engaged in insider trading by flogging 4514 Sam's Seafood shares when he knew one of the fishmonger's creditors was about to call in a debt.

At the time, Sam's was trading at about $1 a share. It later went into administration. Mr Stephenson will reappear in Downing Centre Local Court next month. Sam's has since come out of administration and received a price query from the ASX on the 0.2c surge in its shares to 1.9c last Friday.

One explanation from Sam's was its engagement with "a reputable investor relations group in Canada to assist with the companies future promotion". It also noted it was assessing a potential drilling program in Indonesia. Sam's, a fishmonger only by name now, has since moved into exploring for coal.

Got a tip or name for a new TV show starring David Leckie and James Packer? email srochfort@smh.com.au

Insider

Edited by Jamie Freed

 

Lew holds trump card at Breville

The retail magnate Solomon Lew and his Premier Investments will be decisive in GUD Holdings' $300 million scrip bid to take over Breville Group.

Combined, Lew and Premier control 30.5 per cent of Breville, and Premier recently boasted it had up to $1 billion available for acquisitions, based on its $329 million of cash combined with potential borrowings.

Although many institutional investors in Breville have shown their willingness to accept GUD's scrip – 28 per cent of the register have already accepted in the absence of a higher offer – a cash offer could prove a compelling alternative to some.

"Solly Lew is probably the smartest guy ... in retail," said the fund manager David Paradice of Paradice Investment Management, which has given the provisional thumbs-up to the GUD bid.

"He'll probably be about five metres ahead of us. So who would know what he'll do?" There is an obvious logic in combining GUD, which has the Sunbeam appliance licence in Australasia, with Breville, which has the ability to sell that brand in the North American market.

However, if Premier decides to dip into its cash reserves, GUD, advised by Macquarie Capital, does not appear to have much obvious capacity to raise its bid.

The one-for-four offer, as it stands, is earnings per share neutral to slightly accretive, assuming it gains control of 50.1 per cent of Breville.

It already has committed acceptances, giving it control of 47 per cent of the register, assuming there is no higher offer. There would be additional cost savings available from securing 90 per cent, and therefore compulsory acquisition, although no figures are expected to be outlined in its bidder's statement.

But with only $16 million of cash on hand and $60 million of unused debt facilities, GUD would be hard-pressed to add more than a small cash sweetener to its offer to avoid a situation where the takeover becomes dilutive to earnings.

The chance of an outsider, such as an international rival or a private equity group, making a bid for Breville are small, given the Harbinger Capital presumably shopped its 19.4 per cent stake in the appliance company around the globe in May before it was picked up by GUD.

Rights of duet

It appears DUET Group, an oft overlooked infrastructure group jointly managed by Macquarie and AMP, could be a key beneficiary of the proposed recapitalisation of Babcock and Brown International.

All of DUET's Australian assets, including the Dampier Bunbury pipeline in Western Australia, are held in partnership with BBI and Singapore Power, which acquired them through the ill-fated takeover of Alinta.

If BBI's recapitalisation proceeds, it plans to list its interest in those assets as "held for sale" and pay its new cornerstone investor, Brookfield Asset Management, $5 million a year to manage them.

Brookfield would also get 1 per cent of sale proceeds. DUET has a pre-emptive right over the gas pipeline, Multinet and WA Gas Networks.

BBI appears confident the transfer of management to Brookfield will not prove an immediate trigger of those rights, although DUET is still looking over the details of the BBI documentation.

However, Brookfield plans to buy the assets itself or sell them to a third party, which will trigger the pre-emptive rights.

In addition to DUET, Alcoa would also have a pre-emptive right over the stake in the Dampier Bunbury pipeline, in which it has a 20 per cent interest.

BBI has admitted there is no equity value left in the assets, which it calls the Australian Energy Transmission & Distribution business.

It had contributed $1.59 billion of equity to buy AET&D as part of the joint bid for Alinta in 2007 and assumed $1.1 billion of debt over the assets.

BBI has since taken a stunning amount of impairments against AET&D, including $680 million announced in the recapitalisation prospectus last week and $232 million at the time of its results in August.

Based on DUET's valuations, BBI's interest in the assets they co-own would be worth $1.65 billion, which is believed to be about the same amount as the debt against BBI's share of those assets.

Internally, BBI is said to value the Tasmanian pipeline business, in which DUET has no interest at about $200 million.

As for the assets for which DUET has pre-emptive rights, Credit Suisse said the company would be likely to have to contribute about $368 million of equity to buy the assets in order to return the asset-level gearing to appropriate levels.

Credit Suisse said DUET would be likely to need to raise equity to complete such a deal.

Airport block

Australian Infrastructure Fund appears to value its 10.14 per cent stake in Australia Pacific Airports, the holding company of the Melbourne and Launceston airports, at more than the $299.4 million on its books.

Or at least that is the obvious interpretation of its announcement on Friday night that it had discontinued the sales process for the stake despite receiving an indicative offer that was higher than the book value.

The fund said it had decided that selling the airport stakes now would not be in the long-term interest of its security holders.

It was less than six weeks ago that the fund told the market it had mandated an adviser, said to be RBC Capital Markets, to sell the interest following preliminary talks with interested parties.

AMP and Deutsche Bank's RREEF Infrastructure have pre-emptive rights over the asset. At the time, Merrill Lynch said it doubted Australian Infrastructure Fund would receive a bid that high in this market, particularly because it is a minority stake, while UBS questioned the logic of a sale.

Elsewhere in airports, investors have until the close of trade today to buy MAp shares and be entitled to take part in a one-for-11 rights issue at $2.30 that will enable MAp to buy back its management rights from Macquarie Capital for $345 million. MAp shares last traded at $2.81.

jfreed@smh.com.au

Briefs

 

 

 

 

 

Energy

Technology grants Australia is close to allocating $300 million in renewable-energy grants as it seeks to reduce carbon pollution and spur development of clean-power technology. The selection of winning companies from 36 applications is almost complete, and an announcement is likely soon, a spokesman for the Resource and Energy Minister, Martin Ferguson, told Bloomberg. The Renewable Energy Demonstration Program is aimed at promoting the commercial use of emerging ocean, geothermal and other technologies.

Fund Manager

Tapping the rally The Melbourne hedge fund manager K2 Asset Management plans to start a global equities fund that seeks to profit as the worldwide sharemarket rally spreads to smaller companies. The long-short fund will target annual returns of 15 to 20 per cent and aims to attract up to $100 million by the end of its first year. US

Economy

Retail sales slip Economists expect US retail sales data for September, due on Wednesday, to fall 2.1 per cent after rising 2.7 per cent in August. Car showrooms sat empty after the "cash for clunkers" program expired, the economists said.