Executive Summary: October 19, 2009
By Scott Rochfort | smh.com.au | 19 October
Mirvac chief Nick Collishaw ... make mine a skinny latte with a fat pay cheque. Photo: John Shakespeare
CBD
Demolition pros will clock Star City's rock
Tabcorp Holdings has dealt a blow to Sydneysiders itching to tear down the fibreglass rock in the main atrium of Pyrmont's Star City casino.
The listed gambling concern has called off plans to give volunteers sledgehammers to knock down the fake multi-storey rock, much in the same way the Berlin Wall came down 20 years ago.
''It's got so much electrical wiring and so much gear inside it that it would have been a danger for people to smash up,'' a clearly disappointed Star City spokesman, Peter Grimshaw, explained to CBD.
''We're just going to leave it to the professionals,'' he said. ''Safety comes first, I'm afraid.''
Grimshaw also shot down a market rumour relayed to CBD that Star City owned Australia's largest disco ball. ''We're tacky. But we won't claim that,'' he said.
The dismantling of the 15-metre-high rock coincides with planned removal of another Australian icon, the Big Prawn in Ballina.
The rock was built by the Wal King-headed Leighton Holdings in the mid-1990s and was originally dubbed the Terra Australis.
It seemed like a nice concept that went horribly wrong.
The rock was originally flagged as a centrepiece of the desert-themed gaming floor that would include a lagoon with cavern-like bar in its innards.
A dip, by George
Mirvac Group in its annual report has disclosed it paid former chief executive Greg Paramor a $2 million goodbye when he left the building in August last year.
This should help pay for the upkeep of Paramor's rail carriage, named the Sir John Forrest, which in the past has been seen plying the Nullarbor.
The coffee shop owner and new Mirvac boss, Nick ''Coleslaw'' Collishaw, enjoyed a doubling of his package to $2.8 million courtesy of his elevation into Paramor's job.
This was despite Collishaw missing a bonus, given the collapse in Mirvac's share price and the company reporting a tidy $1.08 billion full-year loss.
The pay rise might come in handy. There is talk the in-house George Gregan-branded coffee shop in Mirvac's Sydney CBD headquarters has suffered a fall in trade.
This is the same coffee outlet at which Paramor's partner, Meagan Bryant, and the former Wallaby captain's wife, Erica Gregan, are often seen frothing milk.
One CBD Mirvac spy claims trade was hit when Bryant remarked to Collishaw that the coffee shop was always full of Mirvac staff.
Collishaw allegedly bought up the issue with his staff, which led to a dip in caffe latte sales.
Collishaw and Bryant own a 24 per cent stake in the GG coffee business, which also operates in the Mirvac-built Fairfax Media offices in Pyrmont.
Quitting Quantas
The diaspora of former Qantas executives continues.
The one-time aspirant for the chief executive's job at the Flying Roo, John Borghetti, has joined the board of the Florida-based maker of general aviation planes and tiny jets, Piper Aircraft.
The self-confessed revhead and former recreational race car driver clocked up more than three decades at Qantas and is still serving out a non-compete clause with the airline that will expire next month.
From then on, Borghetti will be free to look for an executive role. The 54-year-old also welcomed former Qantas deputy Peter Gregg's move into the chief financial officer role at Leighton Holdings.
''I think Peter is a fantastic CFO and a good bloke,'' Borghetti told CBD. ''I just think he is going to do an unbelievable job in that company,'' he said of his former rival for the top job at Qantas.
Another former Qantas colleague, Grant Fenn, took up his new job as the head numbers man at the engineering concern Downer EDI this month.
The former head Qantas big kahuna Geoff Dixon, meanwhile, has joined the board of advisers at the US-based consultancy Seabury Aviation & Aerospace and also sits on the board of the ASX-listed Facilitate Digital Holdings Limited, where his son Ben is chief operating officer.
Dixon is the deputy chairman of Tourism Australia and also spends time on the Crown Limited board with his fellow former Qantas director James Packer.
The departure lounge at Virgin Blue has been just as busy this year, with chief executive Brett Godfrey declaring his plans to step down next year, and several high-ranking executives already pulling the pin.
True tradesman
The Australian Securities Exchange director Russell Aboud has helped keep the trades ticking along in the bourse by flogging another $2.7 million worth of shares.
The Ord Minnett chairman has reduced his stake from 322,382 to 25,000 shares since the exchange's merger with the Sydney Futures Exchange in 2006, collecting $10.7 million on the way.
Aboud has held onto his seat since a protest vote at last year's annual meeting where 9.43 per cent of shareholders were against his re-election.
The ''no'' vote was recommended by the proxy advisory firm RiskMetrics, which expressed its concerns that the ASX had been neglecting its duties as a market supervisor (and as a consequence could lose them to ASIC).
It recommended the vote against Aboud ''simply because he [was] the first of the incumbents [on the board] listed on the proxy form''.
The second ASX director on the proxy form to dodge the bullet at the time was Trevor Rowe, who has since grown in stature through his chairmanship of the toll-road company BrisConnections.
Media optimist
APN Media's boss, Brendan Hopkins, meanwhile, has decided to buy 250,000 shares in his company at $2.27 a pop.
Maybe Hopkins is feeling a little more relaxed about the outlook for the regional newspaper market.
In March, Hopkins flogged about 430,000 shares at between $1.10 and $1.16 to help pay a tax bill.
Got a tip? email srochfort@smh.com.au
Insider
By Jamie Freed
Kathmandu follows Myer's float route
The outdoor retailer Kathmandu will be seeking to lure investors into its $400 million or so float from today, with the publication of a prospectus and conference calls in a similar manner to the Myer launch last month.
Perhaps in light of the fact that Goldman Sachs JBWere and Macquarie Capital are managing both floats (with help from Credit Suisse on the Myer gig), it is not surprising that there will be several similarities between the offerings.
As with Myer, the Kathmandu prospectus will contain a pricing range, with the final price to be set by an institutional bookbuild.
The ultimate number of shares on offer will also remain unknown. Kathmandu's owners, Goldman Sachs JBWere and Quadrant Capital, have followed the lead of Myer's owners, TPG and Blum Capital, and left open the possibility of selling all of their holding or keeping a stake as high as 20 per cent, depending on the outcome of the institutional bookbuild.
The final price of the Kathmandu shares will not be set until the bookbuild next month, which means the Myer bookbuild on October 30 will be examined closely.
Myer is offering its shares with an earnings multiple range between 14.3 and 17.3.
Kathmandu had initially talked about a lower range, with an earnings multiple of about 12 to 14.4 in its visits to institutions covering small cap stocks in Sydney and Melbourne, but it is said to be more likely that the final range will be an earnings multiple of 13 to 15.
It will also be worth watching whether Kathmandu receives the same level of demand from retail investors as Myer, given it is more of a niche brand and is not using a strong loyalty program like Myer One to promote the float. Myer starts trading on November 2, and Kathmandu is expected to do so in Australia and New Zealand in mid-November.
Eyes on Extract
In light of the high quality of Extract Resources's Rossing South uranium project in Namibia - adjoining Rio Tinto's Rossing mine - there is obviously plenty of corporate interest in the $2.4 billion company.
However, Extract has made clear that while it is interested in strategic partnerships to help develop the $US704 million ($768 million) mine, which could produce 6800 tonnes of uranium a year, it is not looking to be taken over.
Extract has a very concentrated register. Kalahari Minerals of London, now in effect a holding company, owns a 40.9 per cent stake, Rio Tinto owns 15.1 per cent and Polo Resources of London owns 10 per cent.
There are suggestions that as part of the search for a strategic partner, led by Rothschild, the parties that have signed confidentiality agreements have also agreed to standstill arrangements preventing them from buying Extract shares.
Rio is believed to be among those interested in a partnership, because there are obvious cost savings available due to the proximity of Rossing South to the Rossing operation.
The Rossing South ore has a higher grade than the material Rio is processing. Extract will have plenty of uranium to sell once Rossing South enters production in 2013, so its primary concern in a joint venture is being able to place the material with customers rather than raising the funding for construction.
In recent months the uranium miners Uranium One and Denison Mines have partnered with a Japanese consortium and Korea Electric Power respectively for funding and offtake partnerships.
Extract's potential product is already said to have attracted interest from uranium buyers in China, India, South Korea and Japan, so miners may not be the only ones taking part in the search for a partner.
Extract is targeting a resource of at least 227,000 tonnes, which would make it the second-largest uranium deposit in the world behind BHP Billiton's Olympic Dam.
Bond issues
It will be interesting to see whether a proposed relaxation of the disclosure surrounding bond issues to retail investors will lead to a huge increase in such issuances.
Australian retail investors have traditionally held a much higher proportion of equities in their portfolios than fixed income products, whereas in other countries, such as Germany and New Zealand, bonds are more popular.
Although more corporate bonds have been issued than usual this year, Australian companies have traditionally tended to favour banking facilities at a higher rate than their overseas rivals.
The credit crunch made it more difficult to refinance facilities earlier this year. However, debt market specialists say bank facility margins have contracted noticeably in recent weeks amid aggressive competition from lenders willing to re-enter the market now that recapitalisations are largely complete.
Experts say the retail bond market will be the most open to companies with ''household names'', as evidenced by issues from Tabcorp and AMP this year, and to the banks.
But some are sceptical that companies will look to the retail bond market very often, even if the disclosure rules are lightened.
''The issuers that are best suited are the issuers that don't need to [use the retail market],'' one industry participant said, noting they would find better rates from bank debt or overseas bond markets.
Another debt specialist was more optimistic about the emergence of a strong retail bond market, but cautioned there would not be $20 billion of issues overnight.
Caledon focus
It seems that the interests of Essar Group of India in the Australian coal sector extend beyond its recent $US150 million bid for Rocklands Richfield, which trumped a rival offer from Jindal Steel & Power of India.
Essar operatives were spotted by astute observers at Emerald airport in the Bowen Basin after their Gulfstream jet broke down.
The Essar executives are said to have been visiting projects owned by Caledon Resources.
Caledon, which has a market value of $33 million, in February appointed RBC Capital Markets to conduct a strategic review after it had received an initial non-binding takeover bid from an unnamed party.
In an update last month, Caledon said it had recently opened its data room to more parties than had been allowed in initially due to increased interest in coking coal assets.
Caledon owns the small Cook mine, which produces 400,000 tonnes a year and has 406 million tonnes of resources, and the Minyango project, which has 342 million tonnes of resources.
Got a market-moving tip? Email jfreed@smh.com.au
First published by Smh.com.au on October 19 2009
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