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CBD

Billionaires share a memory problem

The NSW Supreme Court judge Robert Austin has provided a detailed tally of the in-court memory lapses in the ASIC case against Jodee Rich and Mark Silbermann.
 
When he handed down his 3105-page judgment throwing out ASIC's attempt to have the former One.Tel executives banned as directors yesterday, Austin noted how James Packer in his nine days in the witness box many times responded to "questions in cross-examination with answers to the effect that he could not recall, or did not remember, or had no recollection".

The judgment noted the defendants said the billionaire's memory lapses occurred 1517 times or an average of 168 times a day. But Austin said this might be an underestimate.

"My tipstaff-researcher did a similar search and found 1951 questions in cross-examination to which Mr Packer jnr replied 'I can't recall'," Austin said in his ruling.

Another witness who appeared to have even worse memory problems was Lachlan Murdoch.

"My view is that there was a significant problem of lack of recollection in Mr Murdoch jnr's evidence, which undermined its credibility," said Austin.

"He answered 'I can't recall', or similar words, in response to 881 questions, a higher daily rate than Mr Packer jnr.

This was despite having spent several days preparing to give evidence."

Water taxi

The Cabcharge boss, Reg Kermode, confirmed his superhuman abilities at his company's annual meeting yesterday.

Reflecting on the media's recent coverage of himself, Cabcharge and the other company he heads, Taxis Combined, Kermode suggested that he indeed might be able to walk on water.

"One only has to look at me as an example of just how vexatious some people can be in today's society.

I think that maybe if I was to walk across Sydney Harbour tomorrow, from say Cremorne to Circular Quay, there are sections of the media whose headline (and no doubt photograph) would read 'Taxi tsar incompetent - can't swim'," Kermode said in his talk to shareholders.

The 83-year-old also gave shareholders some words of wisdom inherited from his mother.

"It's not the number of times you go down, it's the number of times you come back up," Kermode said.

He managed to stay up at the meeting, where about 40 per cent of his shareholders voted against Cabcharge's remuneration report.

Reg's $2.5 million pay packet for last financial year would have been enough to pay for an estimated 60,000 return taxi rides between Cremorne and Circular Quay.

Offering another parable to his disciples and shareholders that he learnt from his mother, Reg said: "Life isn't about surviving the storm but dancing in the rain."

He added: "What she didn't tell me was that it was going to come down in buckets."

Reg also shut ABC TV out from filming the meeting, noting how they didn't give him the "opportunity to respond" to one of their many reports on his taxi operation.

"So I thought I would extend the same courtesy," he said.

Winged Keeling

You have to hand it to Brad Keeling for helping make One.Tel the household name it is today.

Despite the telco collapsing, leaving creditors more than $300 million out of pocket and customers disconnected since 2001, the One.Tel name lives on.

This seems to have been acknowledged by the business and marketing consultancy firm which Keeling helped set up after the telco collapsed.

On its website, Launch Engineering notes: "Brad Keeling is well known for his involvement with One.Tel. He co-founded One.Tel.

"One.Tel was, all other things aside, an enormous marketing success. It became a household name in the telecommunications sector in Australia, and is still a highly successful business in the United Kingdom and parts of Europe."

All partly true. Another marketing website that highlights Keeling's talents, notes: "Until now Brad's marketing advice has been restricted to the companies he's worked for, enormous marketing success stories that include The Franklin Mint, Imagineering (TelePacific), Strathfield Car Radios and One.Tel."

Seems you do not have to be a going concern to be a marketing success.

Dags to riches 

The Reserve Bank of Australia seems keen for an overhaul of the acronyms and terms used in the Australian debt market.

Yesterday the RBA assistant governor, Guy Debelle, highlighted how residential mortgage-backed securities (RMBSs) in Australia had been unfairly blemished by the ructions in the US subprime mortgage belt.
"As Andre Agassi used to say, 'Image is everything', and the image of securitisation was, and to a large extent still is, very much on the nose," Dr Debelle told a room full of securitisation types in Sydney.

Even though the performance of these products has been nowhere near as bad here as overseas, Debelle said, the market for them is a fraction of its former self, leaving many non-bank lenders high and dry.

"The Australian industry needs to differentiate its product from the US brand," he suggested. Debelle failed to come up with any new names that could help distinguish the Aussie RMBS securities from the American ones.

CBD has a few suggestions: Certified Residential Australian Product, Buy Used Mortgage, Totally Underperforming Residential Derivative and Debt from Australian Growth Suburbs.

Lock 'em up

Debelle also appeared disappointed over the recent acquittal of two Bear Stearns hedge fund managers who were facing a criminal case in the US. "That might actually help the brand name if some people do some serious jail time, but I'm not suggesting that in this country."

Fenix fallout 

Things do not seem to be travelling well at the property group headed (until last week) by the son-in-law of the now departed Westfield co-founder John Saunders.

Fenix Real Estate has closed down its website for "maintenance" and its managing director, Richard Weinberg, has quit as a director fuelling suspicions the company may be going through some turbulence.

Weinberg is married to Monica Saunders and is a director of the family's Terrace Tower Group, whose portfolio of retail SuperCentas is managed by Fenix.

There is now talk of a disagreement between Weinberg and the Fenix co-founder Steven Moss.

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

 

Insider

Edited by Jamie Freed

Two stabs at an Alinta homecoming

The vultures are already circling Babcock and Brown Power. BBP, which remains suspended from trading as it digests the implications of what is widely expected to have been a negative decision on the arbitration of gas supply contracts, is expected to provide an update to the market as early as today.

The fate of the company, which last night revealed plans to rename itself Alinta Energy, is in the hands of a banking syndicate.

It provides a $2.6 billion facility that is a current liability unless it is restructured. A report from Perth that BBP has forbidden staff from purchasing crucial machinery parts in the last week is hardly encouraging.

In the meantime, Insider has learnt that Patersons Capital Partners, a private equity arm of the Perth brokerage Patersons Securities which is run by three former Alinta executives, has made two proposals to buy the Alinta retail and industrial business within the last six months.

PCP has approached the lenders and expressed interest in conducting due diligence, but so far it has been rebuffed.

The deal would involve injecting equity and taking on some of BBP's debt. However, the potential purchase is complicated by the fact the syndicated corporate facility is secured by the majority of BBP's assets rather than tied to individual components.

PCP thinks its approach could prove attractive to the West Australian Government, because it would return management of Alinta's retail and industrial business to Perth. BBP's headquarters are in Sydney.

But no deal can be struck until PCP has access to the arbitrator's decision about the price for gas supply from the North-West Shelf.

It is believed the historic contract price is about $3 a gigajoule, but market rates have now risen to at least $8 a gigajoule.

The issue for BBP is that residential prices are regulated and cannot be raised simply due to an increase in the cost of gas supply. Industrial and commercial volumes are negotiated on a case-by-case basis.

For example, BBP may have locked in long-term industrial and commercial contracts based on the assumption it will pay $3 a gigajoule for gas, and therefore it would take a substantial loss if that price rose to $8 a gigajoule and it was not able to pass on the increase to its customers.

BBP can barely meet its interest payments at the current contract price. PCP hopes that some of the contracts could be renegotiated if the division came under new ownership, as the Alinta retail and industrial business is an essential provider in WA and no one wants to see it fold.

It is not clear whether other potential bidders have approached BBP or its bankers about buying part or all of the company or plotting a recapitalisation.

BBP's largest shareholder is Guinness Peat Group, which has a 10.6 per cent stake.

Woodside strain

For groups needing cash for growth projects but with stretched balance sheets, equity raisings can only be put off for so long.

Woodside Petroleum is one of the rare companies that has not tapped the equity market this year, instead expressing a strong preference for debt funding via the US bond market.

However, with its A- credit rating already on negative watch from Standard & Poor's, it is looking increasingly unlikely that it will be able to hold out on an equity raising for another year if it wants to approve a second train at its Pluto liquefied natural gas project on schedule.

Ahead of a planned tour of the North-West Shelf and Pluto project site on Monday and an annual investor briefing in Perth on Tuesday, JP Morgan estimated Woodside would need $3.5 billion of fresh equity funding by the end of next year in order to approve the second train and keep its credit rating.

The broker said $1 billion could be raised through fully underwritten dividend reinvestment plans, but the remaining $2.5 billion would need to come from a share placement or rights issue, although the sale of non-core assets could contribute some of the amount.

Woodside appears dead set on approving the second train at Pluto next year, but it has yet to find enough gas or strike a deal with a third party.

Chevron, Apache and MEO Australia - all at one stage viable supply options - have gone ahead with other plans, leaving Woodside in a weaker negotiating position with the remaining potential partner, Hess. Nevertheless, the gung ho attitude of Woodside's boss, Don Voelte, has convinced many in the market that he will approve the second train on time next year, allowing the company to roll over its construction crew from the first train. Woodside will be hoping its big drilling campaign in the region next year proves successful, but cutting a deal with Hess could provide the market with more certainty.

Aurora sale

Overseas buyers may have a bit more confidence than locals in the property sector.

There was speculation yesterday that South Korea's national pension fund and The Carlyle Group had sealed a deal to buy Aurora Place in Sydney for $685 million.

The pair is said to have outbid local contenders such as GPT's Wholesale Office Fund, Lend Lease's Australian Prime Property Fund and Commonwealth Property Office Fund.

Macquarie Equities said a deal at the mooted price would provide support for prices on A-grade office building. Elsewhere in the sector, Westfield's US rival, Simon, has reportedly hired Lazard to advise it on a full or partial bid for the bankrupt US mall owner General Growth Properties.

Westfield is said to be monitoring the situation, but apparently has not yet hired outside help.

jfreed@smh.com.au

 

Briefs

Banking

Twice as nice ANZ will more than double the size of its hybrid share raising to $1.7 billion following strong demand for the issue from institutional investors.

Ratings

No more from S&P Credit ratings issued by Standard & Poor's will no longer be available to Australian retail investors from January 1. Under new regulatory rules, ratings agencies are increasingly vulnerable to legal action for their recommendations.

Property

Hedley sells up The hotel group Hedley Gaming and Leisure has raised $36.3 million from the sale of five properties to undisclosed buyer, said to be private investors.

Banks

Bargain Calibre National Australia Bank has paid less than $5 million to acquire Hong Kong-based Calibre Asset Management.

Mining

Moly a goer Australian regulators have given the green light to a private Chinese entity to take control of the molybdenum mining hopeful Moly Mines Ltd for $US200 million ($214 million).

Wages growth

Public interest Rising unemployment and reduced working hours stemming from the economic slowdown have cut annual wages growth to its slowest pace in nearly five years ... unless you are a public servant. Official data released yesterday showed the nation's wages bill grew at an annual pace of 3.6 per cent in the year to September, the slowest pace since 2004.