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Max Moore-Wilton ... playing a familiar tune by the Doughnut Tribe. Illustration: By Shakespeare.

CBD

By order: no tanks allowed on the grass

Suncorp-Metway's new chief executive, Patrick "Montgomery" Snowball, seems reluctant to let go of his memories as a British army tank commander.

"My polite message to those who seek to target us is: 'Get your tanks off our lawn'," said Snowball in his address to shareholders at yesterday's annual meeting.

Snowball explained his career as an "armoured soldier" taught him about decision making and the "value of clarity of thought" .

The Suncorp chief also got shareholders wondering who he was talking about when he said he had a "determination to execute in a timely and efficient manner".

CBD is looking forward to see what battlefield formations Snowball might come up with in the event of a takeover attack.

Will Snowball don battle fatigues? Snowball also attempted to show that he – or at least his speechwriter – had a sense of humour.

"As you have no doubt worked out by now, I have about the best surname one could ever wish to have were one to be leading a company with SUN in its name."

Another chief executive not to mess with is Caltex's Julian Segal, who allegedly learnt some sharp-shooting skills from the Israeli Defence Force.

Tangled web

The independent directors of Macquarie Media must be exhausted after bullying their manager, Macquarie Group, into agreeing to a proposal to internalise the management of the radio network, which reported an impressive $85 million loss last financial year.

Just weeks after independent directors of Macquarie Airports (MAp) intimidated Macquarie into taking $345 million to go away, the Bermuda-based MMG has announced a plan to follow up with a $40.5 million payment to the silver doughnut.

Again the radio network's executive chairman and head disc jockey, Max "the Axe" Moore-Wilton – also the chairman of MAp – has been forced to stand back from the negotiations.

Macquarie Group's two big bananas, Nick Moore and Michael Carapiet, were also left out of the MMG negotiating team.

This meant they could only be on the Macquarie side in the talks. In proving the independence of the "independent" MMG directors in the talks, the media group noted some of them had been appointed by Macquarie and that its independent chairman, Michael Hamer, was also on the board of the Macquarie International Infrastructure Fund.

It noted the independent director Bob Richards also served on the Macquarie Special Situations Fund. According to MMG, another independent, Tony Bell, despite being the former head of the MMG-owned Southern Cross Broadcasting, "has the ability and willingness to operate independently, objectively and to challenge the boards and management of MMG".

"The measures announced today represent a significant step in the development of MMG," explained Leon Pasternak, another independent chairman and partner from the law firm often used by Macquarie, Freehills.

Macquarie Group is at risk of exposing itself to more media scrutiny after agreeing to shed its management rights over its listed fund.

It is believed some of MMG's radio stations, such as Coffs Harbour's 105.5 Star FM and Hobart's Heart FM, will now looking to step up their hard-hitting coverage of Macquarie Group. MMG's chief executive, Mark Dorney, is so excited about the future of the media group that he will stay with Macquarie, leaving it to his right-hand man, Rhys Holleran, to take the reins if shareholders approve the company's internalisation plan.

Brisbane toll 

Celebrations will no doubt be in full swing at Macquarie and Deutsche Bank today when they are welcomed as the two largest shareholders in the massively successful listed toll-road company BrisConnections.

The banks will take a collective 81 per cent stake in the company, whose security price for its two instalments has surged from $2 to 17c.

The stake comes courtesy of Macquarie and Deutsche assuming ownership of the 276.5 million securities defaulted on in the listing of the second $390 million instalment of the road, which has kept Macquarie's lawyers, Freehills, busy this year.

Macquarie at least has recouped some recent costs. On Tuesday the Federal Court judge Arthur Emmett ordered the banned company director Jim Byrnes to pay the silver doughnut $185,000 in legal costs.

The costs stem from the failed $1.3 billion class action Byrnes tried to launch against Macquarie and the managers of BrisConnections in April this year.

Jimmy Houdini

Byrnes had a near miss in another court hearing yesterday. Set to face a grilling in the witness box at the NSW Supreme Court, he pulled off a legal Houdini – avoiding having to answer questions about whether he was in contempt of court – in relation to a case where he is suing a former business partner.

Byrnes skipped having to answer probing questions about whether he had forwarded a copy of a court transcript to business associates, thanks to some deft out-of-court negotiations.

Forwarding a transcript is not usually an offence. It is just that this time the transcript contained confidential details he had sworn to keep secret.

A finding of contempt of court would have landed Byrnes in hot water because he is still serving a three-year good behaviour bond over an unrelated altercation involving a baseball bat and a broken window in the office of the lawyer Hector Ekes three years ago.

At the time Byrnes blamed his behaviour on a "brain snap". Yesterday's case relates to a dispute over a garage full of classic cars in the Philippines.

It was brought by two companies run by Byrnes's wife, Gina. They are BFT Custodians – which stands for Byrnes Family Trust – and BMT Custodians - Byrnes Motor Trust.

They are suing one of Byrnes' former business partners in a Phillipine classic car company, Classic Autocraft, over who owns which cars.

The Byrnes family trusts are trying to stop the former business partner from selling or "dealing with" about a dozen classic and collector cars, including a "Dino" Ferrari, which is a classic Ferrari from the late '60s and early '70s.

The cars are in the Philippines. The trust also wants an order that the cash from the sale of other cars through the British auction house Coys last October be paid to the court until it is decided who it should go to.

The former business partner, who has asked not to be named, says Byrnes still owes him $165,000 in legal costs from two previous legal skirmishes.

For the record, Byrnes gets around town in a black Chrysler with dark tinted windows and the number plate "0".

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

Insider

Edited by Jamie Freed

Unravelling MMG as a prelude to MIG

Now that Macquarie Media Group (MMG) has unveiled its plan to ditch Macquarie Capital as its manager on the same day as its annual meeting, the market is anticipating Macquarie Infrastructure Group (MIG) could do the same in tandem with its annual meeting on Friday and the release of Macquarie Group's results the same day.
 
MIG plans to split into a "Good MIG" and "Bad MIG" and it remains unclear whether it will cut management ties with both entities or whether a capital raising could be on the cards.

In the case of MMG, in addition to a management fee arrangement, there was a rather nefarious "asset advisory agreement" that would kick in if shareholders dumped Macquarie as the manager without compensation.

The independent expert found the fees under the asset advisory agreement would have been "equivalent or higher" to those payable under the existing management arrangements.

It turns out that MIG also has an asset advisory agreement in its stable, albeit over only one asset, the Autoroutes Paris-Rhin-Rhone.

Should MIG shareholders dump Macquarie as a manager without compensation, it would be forced to pay an annual fee of 1.25 per cent of its base investment cost of €338 million, even though it has since slashed the book value of the asset by 42 per cent.

That translates to a fee of $6.88 million a year at current exchange rates but is not payable while Macquarie stays as manager.

Based on the valuation metrics used in the MMG independent expert report, it could cost $27.5 million to buy out that right alone. MIG has more than $900 million of cash on its balance sheet but some will need to be allocated to costs such as stamp duty.

In that context, it's worth noting MAp and MMG have both bought their management rights back from Macquarie using cash because they were trading at a discount to their asset backing and investors did not want Macquarie to be issued scrip at such a low price.

Unlike MAp, the exit of Macquarie as a manager of MIG is not expected to trigger any major refinancing requirements.

Therefore, there has been an expectation that even though MIG has historically paid higher fees than MAp, it is likely to pay less than $345 million to buy back its management rights.

UBS has estimated MIG will pay up to $245 million.

Manic Monday 

The Myer institutional bookbuild was said to be covered at the lower end of the $3.90 to $4.90 range last night, before bids from overseas investors.

The fall in the market yesterday would not have encouraged early bids. The book, run by co-lead managers Goldman Sachs JBWere, Macquarie Capital and Credit Suisse, is set to close at 3pm today, with some local institutions said to be holding off until the last minute to make a final decision.

One institution that bid for $4 million of stock at $4.10 was told that $300 million of bids had been lodged within the first hour.

In a process such as this, sentiment can feed on itself as fund managers attempt to factor in the mindset of their competitors and gauge the chance of a stag profit.

The final price is set to be revealed tomorrow, with trading due to start on Monday.

Off the potash 

With some quarters of the market itching for BHP Billiton to splash out on a big acquisition, any comments made at its annual meeting in London today are sure to be analysed in detail.

North American potash companies have been among the most talked about targets among investors and analysts, but mooted moves on PotashCorp or Mosaic could be wide of the mark.

One issue, highlighted by Credit Suisse in a more sober note yesterday, is that while potash is attractive to BHP due to a similar market structure to iron ore, the major takeover targets earn a large chunk of their earnings from the likes of nitrogen and phosphate, which are less attractive.

A few years ago, when BHP pondered a bid for Alcan or Alcoa, one of the reasons it did not even enter the Alcan data room was the risk involved with offloading the downstream assets.

Rio's troubles in that area after acquiring Alcan are well-documented.

So unless BHP had a buyer lined up for the unwanted assets before a bid – a difficult proposition in today's financing environment – it would appear unlikely to want to carry that risk.

Additionally, Credit Suisse noted that even the mighty BHP balance sheet could only bear a cash purchase worth $US15 billion if it were to maintain its A credit rating. PotashCorp has a market value of $US29.8 billion, while Mosaic is worth $US23 billion.

Timber-r-r-r

Elders will be hoping the competition regulator eventually approves Gunns' planned $100 million acquisition of its ITC Timber business despite releasing a statement of issues yesterday.

As well as its recent equity raising, Elders has been depending on the ITC proceeds, along with a planned sale of its interest in the Hi-Fert joint venture with AWB for $69 million, to complete the restructure of its balance sheet.

The Hi-Fert sale has already been pushed back until early next year. The Elders management team was en route to Hong Kong last night for an investor roadshow but it is expected to issue a brief statement to the market today about ITC.

jfreed@smh.com.au

Briefs

Health

Health NIB vindicated The private health insurer NIB said yesterday its rejection of an unsolicited, non-binding takeover made by an unnamed predator at $1.15 to $1.20 a share had been justified by the subsequent performance of its share price.

Construction

Bottom of cycle The building products maker Boral has predicted that the remainder of this year would represent the bottom of the housing cycle in the US and Australia, but its next financial year would still be tough. Investors at yesterday's annual meeting heard it was still too early for the company to issue earnings guidance for the year.

Gas

PNG approval The Papua New Guinea liquefied natural gas project is a step closer to proceeding after the PNG Government approved the environmental impact statement. The project involves ASX-listed companies Oil Search and Santos.

Retail

Fantastic ahead The furniture retailer Fantastic Holdings said its September quarter results had been strong and that the retail outlook for Australia is promising. Fantastic said the group's like-for-like delivered sales had risen 4 per cent in September compared with the same month last year, and total sales had risen 15 per cent.

Energy

Origin output flat The oil and gas producer Origin Energy has reported a flat quarterly output but said its coal seam gas developments were progressing well. Revenue from gas sales during the quarter rose 8 per cent to $146.2 million, as prices for oil, condensate and gas improved.

Markets

Traffic opens IPO A traffic sign and street-sweeping company, The Traffic Group, has opened its $5 million initial public offer. The offer is for 25 million shares at 20 cents each, set to close on November 16.

Property

Myer site sold The vacant Myer building site in Hobart's city centre – burnt down two years ago – and a six-storey city building have been sold as a package for $16 million to a Tasmanian property developer.