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CBD

Game, set but not quite match for Rickard's tennis court

Pacific Equity Partners co-founder Rickard Gardell, the poor twin brother of one of Sweden's richest private equiteers, Christer Gardell, appears to have weathered the financial crisis in reasonable shape.

After snapping up his former next-door neighbour's property in Mosman for $4.1 million last year, Gardell and his wife Anna will seek approval tonight to bulldoze the house and replace it with a tennis court, "plunge pool" and rumpus room.

Mosman Council's town planner has already recommended the $2.28 million redevelopment overlooking Quakers Hat Bay in Middle Harbour be approved at tonight's council meeting.

The Gardell family development includes a tennis pavilion with a curved copper roof covering a third of the site.

The addition to the property will allow Rickard to play host to his richer brother, who has some flash tennis facilities of his own at his summer house in Båstad in Sweden.

The town of 5000 also plays host to the Swedish Tennis Open every July.

However, even if the tennis court is approved, it is doubtful it will be ready in time for Rickard Gardell to get some practice for the 2010 Australian Tennis Seniors Championships.

Gardell is registered in the 45 years and over event at the championships that will be held in the Gold Coast in January.

While Rickard's firm has stakes in the vacuum cleaning powerhouse Godfreys, the book retailer Borders-Angus & Robertson and Hoyts, Christer's outfit Cevian Capital has stakes in the Stockholm Stock Exchange and Volvo.

Goldfingered

ANZ Bank's chief executive and 007 impersonator Mike Smith has fought off some tough competition to take the title as the highest remunerated retail bank executive in the land.

Not a bad effort, given he runs the smallest of the big four banks. Despite seeing his headline pay fall from $12.96 million to $10.93 million for the year to September 30, it seems the financial "armageddon" Smith warned about a year ago never hit his pay packet.

His base pay remained at $3 million and his short-term incentives (STI) were steady at $2.4 million. So much for the financial crisis.

The annual report says Smith was paid 150 per cent of his STI (which included an additional cherry approved by shareholders at last year's annual meeting). He was also paid $2.3 million in "performance rights" compared to $1.8 million in the previous year.

The only thing that let 007 down were the $3.1 million in "other equity allocations", compared with $5.1 million in the previous year.

These payments largely relate to the $9 million sign-on cash payment Smith turned down when he joined ANZ, when he took 330,033 shares instead.

Fortune tellers

NAB's chief teller Cameron Clyne, meanwhile, has taken the trophy as the lowest-paid big bank chief executive for 2009.

His bank's annual report showed Clyne had to make do with a measly 126 per cent lift in base pay to $2.35 million in the year, courtesy of being promoted to the top job in January.

Clyne's total pay came in at $5.2 million for the 12 months to September 30, which was up from the $2.95 million he was paid in the previous year to run NAB's New Zealand operations.

Westpac's chief executive, Gail Kelly, did a lot better in the era she has dubbed the New Normal, pocketing $10.6 million in the year.

Perhaps Clyne is only half as good. Or perhaps Clyne, who is known to have occasionally taken the bus to work, is keen to cling to his Penrith roots.

Commonwealth Bank's chief knight Ralph Norris - who has boasted about his personal wage restraint - pocketed a modest $9.2 million last year.

Little earner 

NAB's former chief, John Stewart, meanwhile, is in contention for the Geoff Dixon award for the biggest bundle of cash pocketed for three months' work.

In the three months to December 31, 2008 (which no doubt included a few lieu days), Stewart was paid a $2.75 million goodbye as part of his $7.5 million package for the period.

The former NAB poster child Ahmed Fahour was paid $1.6 million in termination benefits.

Dial O for over 

The company that has lasted longer in the court lists than as a going concern, One.Tel, is set to mark another milestone in the NSW Supreme Court at midday tomorrow.

Justice Robert Austin is scheduled to hand down his judgment in relation to a case bought by the Australian Securities and Investments Commission against two of the telco's former directors, Jodee Rich and Mark Silbermann.

Interested parties are recommended to bring a wheelbarrow for what is expected to be a mammoth judgment.

The civil action that was launched by ASIC in December 2001 is seeking compensation and to have Rich and Silbermann banned as company directors.

The first hearing day of the matter was in September 2004 and was in court for 232 days until August 21, 2007.

On his Twitter page, where he calls himself Wingdude, Rich claims to be a "battle-seasoned CEO".

Native title

Chris Brown, the head of the lobby group Tourism and Transport Forum, showed his respect towards the traditional owners of the land yesterday at a luncheon at Justin Hemmes's Establishment.

"That is, all the bankers in this room," remarked Brown, with the Lego-block builder Harry Triguboff and Hemmes also being recognised for their links to the land.

It is not the first time a Brown family member has showed their deep respect towards traditional landowners.

TTF's founder (and Chris's dad) John Brown mulled over the idea of building a monorail from Uluru (aka Ayers Rock) to Kata Tjuta (aka the Olgas) in the 1980s when he was a tourism minister in the Hawke government.

At least it could have encouraged people not to walk on the sacred monolith.

No gold for blue

Is the Virgin Blue marketing team using some twisted form of reverse psychology to build loyalty among its frequent flyer card holders?

Last Friday the airline notified thousands of its Velocity members they would be upgraded to gold status, which would include free lounge access, priority check-in, extra baggage allowances and two personalised baggage tags.

"We wanted to say thanks so much for your ongoing commitment to the Virgin Blue Group, we really love having you around," the email said.

Virgin Blue sent out an email afterwards, telling customers to ignore the upgrade. Blaming Friday the 13th for the mishap, the later email started with an "Oops".

Lucky that was the only thing that seemed to go awry on the day.

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

 

Insider

QBE shadow cast in another direction


By Eric Johnson

Faced with another dry spell, Insurance Australia Group executives are breathing a little more easily.

Storms, hail and floods represent the costliest and most frequent payouts for general insurers, and so far this financial year natural disasters are well down on the past two years.

But that's not the only thing that's making life a little easier. The shadow of the bigger rival QBE Insurance fades as IAG shares stage a rebound.

IAG closed another 5c higher yesterday at $4.07, breaking above its recent range trading of $3.70 to $4. On Friday it hit an intra-day high of $4.13, its highest level in almost two years.

And IAG's recent updates to the market, including to the annual meeting, show the insurer is holding steady in its recovery.

Pricing increases on personal lines have been secured, and returns on investment portfolios are improving. Significantly there has not been one of those natural disasters in the new financial year that cause a large setback in profits.

However, most of the support appears to be goodwill from a market taking a fresh look at so-called strategic targets.

This comes back to QBE's continuing interest in expanding in Australia. With more than two-thirds of its profit overseas, QBE is looking to boost local income to reduce its currency risk and improve its tax benefit.

QBE walked away from its informal $8.7 billion takeover offer in May last year after IAG's board refused to endorse a deal. IAG's chairman, James Strong, said he continued to stand by the decision to reject the approach by QBE, noting that it was highly conditional and an incomplete offer.

He also noted the better performance of IAG's shares relative to QBE's since March. So what are the chances of QBE making a fresh move on the insurer? Last time QBE offered 0.145 of its shares and 90¢ cash for each IAG share, translating to $4.16 a share yesterday.

To help pay for the deal, QBE was aiming for cost synergies of $300 million. But this could be a little tougher today, seeing the recently appointed IAG chief executive, Mike Wilkins, has since moved aggressively on IAG's cost base.

The broker Goldman Sachs JBWere crunched some numbers and concluded QBE could offer $4.15 a share and the transaction would still be earnings-per-share neutral in the first year, and accretive in the second.

Deeper synergy estimates or a rally in QBE shares could take an offer to as much as $4.50 a share before any deal becomes earnings dilutive for QBE within the first year.

An offer up to $4.70 would represent earnings-per-share dilution of as much as 3.5 per cent in the first year, and only slightly positive in the second.

It is hard to see the conservative QBE making a case for such multiples. A more realistic transaction for QBE would be a $1.3 billion trade deal for Wesfarmers' commercially focused Lumley insurance.

Here synergies could be significant, about $1.3 billion in annual premiums would be added, and Lumley's low rates of return on capital could be taken advantage before any upswing.

All they need is a willing vendor looking to raise some quick cash.

Asia in tandem 

For Australia, signs of life in the Japanese economy boils down to one thing: iron ore.

Any recovery in Japanese domestic demand will drive output in steel mills, which is what Australia's bulk commodities exporters have been hoping for.

Indeed, the whole suite of resource producers, from LNG to coal, have been closely monitoring Asia's second growth engine.

Latest figures show Japan's gross domestic product rose at a faster-than-expected 4.8 per cent pace on an annualised basis, after a 2.7 per cent gain in the second quarter, thus easing concerns of a return to recession next year.

For investors, a simultaneous recovery of the Chinese and Japanese economies is a tantalising prospect. For some this could be enough to start the great switch into resources from what could be considered a well-overheated bank sector, which finished lower yesterday.

Since the start of March, when markets started rebounding, the ASX index tracking bank stocks has rallied 56 per cent, outpacing a 44 per cent jump in resource stocks.

For the second time in two weeks BHP Billiton has tested the $40-a-share mark, closing up 2.7 per cent at $40.10.

The last time it was in this territory was at the start of last year, when a US sub-prime crisis was yet to trouble the global economy.

Rio Tinto is also nearing one-year highs, ending 4.8 per cent higher at $72.88. Meanwhile, pressure on Rio Tinto's refinancing needs is set to ease a little more as its prepares to shed its 52 per cent stake in the US steaming coal interest Cloud Peak Energy through an initial public offer.

The stake is valued at $US520 million ($557 million), and Rio is also planning to issue $US600 million of senior debt which, combined, will support its credit profile.

Becton options

It's a long road to recovery, but the property-focused funds manager Becton is looking to give its unlisted funds "more flexibility in their constitutions to enable them to move toward a more sustainable structure".

Becton's Matthew Chun said yesterday: "The flexibility we are seeking will enable the funds to be more readily recapitalised or restructured.

Some of the recapitalisation or restructuring options could include raising capital (through a pro rata offer or cornerstone investor or both), listing on the ASX, a merger of the entities, internalising management, asset sales, a wind-up, or a combination of these options."

Becton has many unlisted funds, and it needs to get its capital structure sorted or risk breaking more bank covenants.

One suggestion that the group is expected to raise at planned meetings with investors is a float of the unlisted funds, worth about $500 million, with some of thatcash coming from a cornerstone investor.

The group already hasa joint venture with the Oman Investment Fund. Becton's shares have clawed back some ground since last week, adding 3.3c to 11.5c since a refinancing.

 

 

Briefs

Myer float 

ATO stays mum The tax commissioner's $700 million claim against the private equity group TPG remains a mystery as the Myer family considers its next legal step to recover losses from last week's controversial court action - an abortive attempt to freeze profits generated from Myer's sharemarket float. TPG has not been contacted by the Tax Office or issued with a letter of demand for the payment of any tax liabilities from the sale. The Tax Office has refused to comment.

Storm financial

Clients back lawsuit Financially devastated clients of the failed investment firm Storm Financial are supporting a lawsuit by Storm's owners against the Commonwealth Bank. Storm's principals, Emmanuel and Julie Cassimatis, have launched a $17 million claim against the bank for losses in their personal portfolio.

Agriculture

Almonds abound Olam International of Singapore has acquired more of Timbercorp's almond orchards, again around Robinvale in northern Victoria, for $160 million in cash. Olam agreed to pay $128 million for 8000 hectares of the almond groves in September.

Commodities

Supply slump One of the world's biggest resources investors has predicted further surges in the prices of gold and bulk commodities. Evy Hambro, of BlackRock Investment Management, said massive cuts in production last year could leave supply of commodities well below expected demand.

Recovery

Steely optimism OneSteel expects reasonably strong activity in key economic sectors early next year thanks to government stimulus measures. But it did not issue an earnings guidance for this financial year, citing uncertainties in the economy, exchange rates and prices.

Village people 

Stocking up Village Roadshow principals Graham Burke and the Kirby brothers have increased their holdings in the company from 60.6 to 68.1 per cent, buying on-market through various vehicles.