Executive Summary: October 26, 2009
By Scott Rochfort | smh.com.au | 26 October
Double act . . . Tim Poole and wee Mark Rowsthorn. Illustration: John Shakespeare.
CBD
Lack of visa curbed ad guru's creativity
One of the world's best-known advertising gurus provided a handy lesson in crisis management to people attending the Caxton Newspaper Awards on the Sunshine Coast at the weekend.
The Argentina-based creative chairman of Europe and Latin America for the ad agency JWT, Fernando Vega Olmos, was booked to be the guest speaker at the annual advertising gabfest in Coolum.
The theme was "Creativity in a crisis" and Olmos was going to tell the executives how a crisis can spark a smart creative response.
But Olmos did not know that you needed a visa for Australia. You would have thought that given he spends his life on a plane checking ads around the world that he would have known this.
Seems not. Olmos at least did not have to go to the effort of writing a speech. Guests were read out an email that his personal assistant in Buenos Aires sent to organisers which CBD believes is not entirely lost in translation.
"Fernando does not do this [pre-written addresses]. Fernando likes to expose himself spontaneously."
House of fun
Asciano Group's former chairman Tim Poole should consider a job in stand-up comedy following his performance at the port operator's annual meeting last Friday.
Explaining the group's $244 million full-year loss and close shave with death before its massively dilutive $2.35 billion capital raising, Poole had the crowd in stitches.
"We at Asciano believe it's a legacy issue," said Poole, interpreting the massive asset write-downs in the ports business during the year.
He noted the issue dated back to the Chris Corrigan years at Patrick before it was taken over by Toll Holdings from which Asciano was later spun-off.
As for the group's massive loss, Poole said: "I don't believe it reflects the true underlying performance."
When explaining his managing director Mark Rowsthorn's $741,678 short-term bonus, Poole explained: "We put in KPIs [key performance indicators] ... and during the year these KPIs were fully or largely met."
Plugging a leak
Sydney spin doctor Sue Cato appears to have figured out the inner workings of journalism.
The operative, who has a list of blue chip corporate clients, has scotched suggestions some media outlets are handed stories on a platter (and manipulated) by corporate relations firms.
"Getting leaks is hard work," said Cato in a piece on the Business Spectator website last week. "It is rare that a journalist gets a gift-wrapped leak without there being a lot of hard work behind the scenes."
CBD immediately got on the blower to Cato and asked where it could find a leak. "If you are looking for a scoop, you and I can talk," she said. But Cato declined to provide anything juicy.
"If it's about disclosure, it's a totally different ball game."
Beg your pardon ...
Friday's news that Julie Dodds-Streeton was appointed to the Federal Court brought back fond memories of a Sydney gig in her days as a barrister.
Dodds-Streeton was a counsel assisting the HIH royal commission and cross-examined an easy witness, one-time FAI adviser Malcolm Bligh Turnbull.
DODDS-STREETON: It will be short, your honour. I'm simply exploring Mr Turnbull's apprehension of the duties imposed on directors ...
TURNBULL: Ms Dodds-Streeton, I'm a qualified lawyer. I'm not entirely without experience in company matters.
I think, without patronising me, you can assume that I have a nodding familiarity with the Corporations Law and duties of directors.
Later ... DODDS-STREETON: If a director were to seek to prefer his own interests ... were you aware that the only way in which he could legitimately do that would be to make full disclosure ... to the company and receive its ... consent?
TURNBULL: Well, it depends. You see, Ms Dodds-Streeton, you're asking me theoretical questions. It depends on the circumstances. It depends on the timing.
You're conducting the cross-examination, but it would be a lot more helpful to everyone, I think, if you just go to the particular facts.
JUSTICE OWEN: I think I'll decide what's ... TURNBULL: I beg your honour's pardon. I'm sorry, your honour. DODDS-STREETON: I'll move on.
Charity champs
Good to see the arch-rivalry between the listed engineering concerns Downer EDI and UGL extends beyond bidding for rail contracts.
Both firms are fighting it out in their fund-raising efforts for this Sunday's MS Sydney to the Gong bike ride. The 133-member Downer EDI Soft Cogs at last count were leading as the team with the most raised, with $103,912 in the kitty, an event record for a single team.
UGL's five-member team were well back in ninth position having raised $17,965 for the 90-kilometre ride but on a per capita basis are punching well above their weight.
It is good to see the UGL team have already got in the spirit of their company's name change from United Group last week.
They have named themselves the UGLies. The UGLies team captain and UGL corporate counsel for special projects, Stephen Barrett-White, is coming third on the individual leader board, having raised $10,580 at last count.
UGL's company secretary, David Simpson, was sixth out of 9647 riders. The chairman, Trevor Rowe, is not riding with the UGLies.
KPMG Actuaries managing director, David Torrance, was fifth, having raised $7435. The head of RBS Morgans's Balmain office, Justin Sharples, was fourth.
The biggest individual fund-raiser is the Henry Davis York legal eagle Geoffrey Hilton, who had raised $35,552 by yesterday afternoon.
Hilton was helped along with a $20,000 donation from the hedge fund investor Man Investments Australia, of which he is the chairman.
Hilton will ride in honour of his wife Jo, who died in April after a 15-year struggle with multiple sclerosis.
Among the 732 teams on the MS Sydney to the Gong leader board are the Commonwealth Bank in second spot, Harvey Norman in third and Westpac in fifth position.
Donations can be made on gongride.org.au.
To and fro-ing
Property industry stalwart Joanna Keating has popped up as the new investor relations manager at ING Real Estate Australia.
Formerly at Stockland in the same role, Keating will need no introduction to her new boss, Denis Hickey.
They worked closely together at Stockland before he left in June after running the group's residential business for many years.
Hickey was appointed the chief executive of ING Real Estate Investment Management last month.
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Insider
Edited by Jamie Freed
Felix nod opens door for deal makers
Investors and deal makers in the resource sector can breathe a sigh of relief.
The Foreign Investment Review Board's approval of Yanzhou Coal's full takeover bid for Felix Resources – albeit on the condition it relists the company within three years with ownership of no more than 50 per cent of Felix's assets – is likely to be viewed as a major precedent for deals been Australian miners and Chinese state-owned companies.
The immediate impact is likely to be in trading for Felix Resources, Aquila Resources and Nufarm.
Investors in all three companies have been on edge since last month when FIRB made public its preference for Chinese state-owned companies to hold less than 50 per cent of project developers and 15 per cent of major producers in the sector.
Felix has a market value of $3.3 billion, and the decision to let the deal through means that nearly every miner bar BHP Billiton and Rio Tinto could be a permissible target for China, albeit with conditions.
Yanzhou and its advisers at UBS had outlined as a concession in its scheme documentation plans to relist under certain conditions, and that more conciliatory approach may have worked in its favour.
Hedge funds and others investing in takeover targets have been very nervous of late, as have bankers that depend on China for deals in the sector.
Therefore, share prices of existing and likely Chinese investment targets should be on the rise today. Approval of Baosteel's application to take a 15 per cent stake in Aquila for $286 million has been delayed, but now that is likely to be seen as little more than a formality.
And Sinochem's full $2.8 billion bid for Nufarm also appears likely to draw a green light.
Nufarm closed at $11.87 on Friday, compared with the $13 on offer from Sinochem.
Felix had been trading at $16.75 – below the offer price of $18 – before the FIRB decision was announced after the market closed on Friday.
Vegas value
There is no doubt Crown's US buying spree, at a cost of $1.5 billion of shareholders' funds at the peak of the market, did not reap the anticipated returns.
However, many observers were sceptical when the casino operator wrote down the value of those investments to zero in August, figuring there must be at least some value in the assets.
The conspiracy theorists even whispered that Crown's decision to write everything down was in preparation of a privatisation bid for Crown by James Packer.
The privatisation talk has died down among those in the know since Packer increased his stake in Crown by 3 percentage points to 40 per cent under creep provisions earlier this month.
Regardless, in light of all of the chatter surrounding those write-downs, it is interesting that the US casino operator Penn National Gaming's disclosed last week that it wanted to buy the bankrupt Fontainebleau project in Las Vegas.
Penn said it had approached a US bankruptcy court and had advanced a proposal to the debtors and several key creditors constituencies.
Crown had paid $333 million for a 19.6 per cent interest in the project's owner, Fontainebleau Resorts.
The Las Vegas project went bankrupt in June, leaving Crown with an additional debt exposure of $US22 million ($23.7 million), and it is expected to cost $US2 billion to restart and complete construction.
Penn disclosed it is offering less than $US300 million for the project. But the market will be pleased that it now seems possible it could receive at least some value for the stake if Penn or another party was to make an offer.
Myer in mind
Target has joined the long list of retailers in the habit of comparing themselves to Myer before the department store's float.
Since Myer left the Coles stable and entered the hands of private equity, it has moved downmarket relative to its old position and created an offering that competes against DJs at the high end and Target at the lower end.
On Friday Target boss Launa Inman said Myer was doing a good job, and noted her executives often visited Myer stores to gain intelligence on their rival.
Target has been somewhat surprised at the amount of discounting Myer has offered on its homewares in particular.
Target therefore is having to respond tactically, with the knowledge that it can move more volume than its rival due to its sheer size and that it has a lower cost structure.
Inman also made the now-common observation that Myer's profits may have grown of late, but its sales had gone backwards compared with where it was two years ago.
However, Merrill Lynch thinks Myer will continue to be more aggressive against Target, and will place increased pressure on Target's sales and therefore earnings growth.
The retail portion of the Myer offer closed on Friday and the institutional bookbuild, which will set the final price, is set to take place on Wednesday and Thursday.
The results are to be announced on Friday.
Other options
Woodside Petroleum has so far been less than successful in convincing the market that Apache's surprise decision on Thursday evening to sign with Chevron's Wheatstone project instead of Woodside's Pluto project is not a big setback.
But now that that deal is done, the focus is on Woodside's other options, because it wants to make a final investment decision on the second train at Pluto by the end of next year.
There is a school of thought that Woodside is so daring these days that it could approve the second train before it secures enough gas.
It would accelerate gas from the first train and, in the meantime, find some more of its own through the drill bit and possibly some deals with third parties.
The most likely third parties are Hess, which already has found some resources in the region, and junior MEO Australia, which expects to pick a partner for its Artemis project in the area by November 18 but won't complete the first well until late October next year.
jfreed@smh.com.au
First published by Smh.com.au on October 26 2009
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