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CBD

Keen, but Norway's quite nice right now

There will be one startling absentee from an economic symposium hosted by the University of Western Sydney next week.

On Monday the speakers at the event, Governing the Economy: the Challenges and the Possibilities, will include the Secretary to the Treasury and wombat enthusiast, Dr Ken Henry, the Productivity Commission chairman, Gary Banks, the former Reserve Bank governor, Bernie Fraser, and the the Australian National University professor and Reserve board member Warwick McKibbin.

But the university's star academic and celebrity doomsday economist, Associate Professor Steve Keen, will be a no-show. The university in a press release, entitled "After the meltdown", said the "symposium offers a rare opportunity to hear from our key economic players and policymakers".

It is probably a good thing for organisers that Keen is touring Norway. Yesterday he suggested to CBD the event should be renamed: "After the crisis"?

What 'After the crisis'?" Macquarie Group, the employer of Keen's nemesis, Rory Robertson, will help sponsor the event.

The Macquarie economist recently won a wager with the bearish Keen over the direction of house prices, which will result in the UWS academic having to walk up Mount Kosciuszko next year.

Robertson told CBD he was still mulling over whether he would attend the event. "If I do, it will be as as an observer," he said.

Stockland saga

The mysterious departure of a Stockland executive could result in some senior management of the property company being hauled into the witness box next year.

The group's former general manager for design, David McCracken, has sued Stockland for more than $1 million for breach of contract after he was shown the door without a cent a year ago.

In a statement of claim filed with the Federal Court, McCracken said he should have his contract paid out because he was lured by Stockland from a high-paying chief executive job in Malaysia.

He signed on with a $450,000 base salary, a $100,000 sign-on bonus and potential annual bonuses worth more than $400,000 a year.

He said Stockland's now departed head of residential, Denis Hickey, and other executives promised he could establish his own design group.

Then, on October 31 last year, Stockland's head of human resources, Rilla Moore, told him "a complaint had been made" and he was told to go home. McCracken has claimed $684,000, three months' pay, plus "ongoing earnings".

He says Stockland never talked to people he said would back up his version of events, including the senior design managers Paul Brown, Nick Drougas and Huw Evans, John Taylor, Jody Summers and David Louden.

The statement of claim does not reveal the allegation against McCracken.

Media captive

It was a bank regulator's nightmare. Not the global financial crisis or even butting heads with bank executives whingeing they are getting a hard deal on regulation.

The clouds started rolling in as the chairman of the Australian Prudential Regulation Authority, Dr John Laker, was giving a lunchtime talk at the RACV club in Bleak City.

Lightning intensified as Laker, a part-time cricket scorer, began talking about the merits of pro-cyclicality and even liquidity.

But, like a Lehman Brothers CDO, things rapidly got worse. After the room had cleared, a bolt of lightning cut power to the building on Bourke Street, leaving the nation's top bank watchdog stranded on the 17th floor with four journalists.

The notoriously low-profile Laker had little choice but to keep his cool and shoot the breeze on all things regulation. The hacks and Laker finally escaped through a service lift.

Storm warning

The Melbourne storm also helped the power company TRUenergy illustrate its concerns about the the Rudd Government's carbon pollution reduction scheme.

Just as the Senate was debating the scheme in Canberra, TRU's Melbourne-based managing director, Richard McIndoe, was on the phone with CBD's energy correspondent when the power cut out.

Talk to trees

Reading tea leaves has long been a popular investment strategy. But one mineral explorer has started reading the leaves of trees - instead of just sifting through soil - to look for gold deposits.

Minotaur Exploration disclosed to the market yesterday "the analysis of certain plant leaves is proving to be a very effective exploration methodology that can be applied to the many kilometres of poorly tested fertile shear zones".

Minotaur Exploration was founded by Derek Carter, the former boss of the original Minotaur Resources, which discovered the Prominent Hill copper deposit and was taken over by Oxiana in 2004.

"The theory goes that the roots of several plant species will penetrate through the overlaying mantle of sand and into the bedrock," explained Minotaur's chief geologist, Richard Flint.

While the black oak and Victoria Desert mallee were good at picking up small traces of gold, Flint noted how some eucalypts were good at picking up uranium.

Rough pitch

The company formerly known as the Big Australian copped some heat yesterday from nationalistic shareholders concerned about the diminishing number of Aussies on its board. BHP Billiton's outgoing chairman, Don Argus, was grilled about this by one shareholder at yesterday's annual meeting in Brisbane.

"Are you coaching the new chairman on being Australian?" the shareholder grizzled. "You don't hold an AGM when a cricket Test is just starting."

The meeting coincided with the start of the first Test between Australia and the West Indies in Brisbane. But the Lebanese-born and Melbourne-raised incoming chairman, Jac Nasser, noted the miner was holding its annual meeting in Brisbane for good reason.

"Don knows how to strategically place AGMs around cricket series," he said. Argus, after all, is a member of the Queensland Cricketers' Club.

Numbers man

Don't Argue Argus, meanwhile, showed he used an unorthodox system of arithmetic as he batted off questions on the pay packet of BHP's chief executive, Marius Kloppers.

"I want to assure you that, despite what has been reported, Marius did not receive a 51 per cent increase in his pay," Argus explained.

Kloppers's total remuneration rise from $US6.87 million to $US10.39 million last financial year - a little over 51 per cent. Argus also seems to have a liberal view on inflation.

"As you can see, the compound annual growth of our chief executive's total fixed pay has been 10 per cent," he said.

 

Insider

Edited by Jamie Freed


Takeover could take out power bidders 

It is no secret that many close observers of the utilities industry are sceptical that the NSW electricity assets up for sale will go to parties other than AGL Energy, Origin Energy and perhaps TRUenergy.

But it has been expected that a broader group, including international groups such as GDF Suez of France, International Power of Britain, Infratil of New Zealand and AES of the US, would have lodged expressions of interest last week, if only to gain access to valuable information about the Australian electricity market.

All along the Government, advised by Lazard and Credit Suisse, has been saying there is plenty of interest. It has adamantly talked down the idea of AGL and Origin being the only serious contenders for the electricity retailers and generation trading rights.

But, if speculation in Europe is to be believed, Suez could be about to lodge a takeover bid for International Power that could take them both out of the running in NSW.

Suez produces most of its power from gas rather than coal and has no existing retailing or generation assets in Australia. Its interest in the NSW sales process, if any, could be tied more to the gas power station development sites.

International Power has generation assets - coal, gas and wind - and retailing assets in states other than NSW, including the very dirty Loy Yang and Hazelwood coal-fired plans in Victoria. Merrill Lynch's European arm has run the numbers and concluded it makes sense for Suez to make a bid for International Power.

But the broker said IP's Australian and Pakistani arms could be divested after the takeover because they are not a good fit for GDF's portfolio.

It also may be reasonable to think that a £6 billion ($10.9 billion) bid for International Power could serve as a big enough distraction for both companies to cause them to lose any existing interest in the NSW privatisation process, particularly amid the uncertainty over the carbon pollution reduction scheme.

Meanwhile, the fate of another utilities group, Babcock and Brown Power, remains up in the air. BBP had hoped to exit a trading suspension this week, but last night that appeared unlikely.

One-stop shop

The first-ever simultaneous accelerated renounceable entitlement offer, which offered a single bookbuild for the renounced rights of retail and institutional shareholders, has finally concluded.

The structure, created by UBS for CSR's $375 million raising, appears to have pushed institutional shareholders into taking up as many rights as possible, with a 99 per cent participation rate.

At the time, some said it was only natural for the participation right to be so high under such a structure, because any rights that would have been renounced under typical raisings would instead be taken up and dumped on the market rather than risking weeks of uncertainty over CSR's trading price.

But CSR's shares, like the rest of the market, rose over the month. That meant the 1 per cent of institutional shareholders and 43 per cent of retail shareholders that renounced their rights received a 9c a share payment in return.

The new shares were issued at $1.66, and the bookbuild for the renounced rights was priced at $1.75. That represented a 2.5 per cent discount to its last trading price before the bookbuild.

The second test of the SAREO structure will occur today, when a bookbuild for the renounced institutional and retail rights for Macquarie Media Group's $294 million raising is held. MMG shares fell 8c to $1.95 after it revealed only 50 per cent of retail shareholders had taken up their rights at $1.55 a share, even though they were well in the money.

Now 22 per cent of the overall shares being issued will need to be priced in a bookbuild today.

Gas bags

The growing rivalry between Woodside Petroleum and Chevron could become even more heated in the coming months.

Woodside is drilling furiously to find gas to feed its Pluto project, particularly in light of Chevron's decision to develop its nearby Wheatstone field separately, with some added gas from Apache.

Woodside recently found 500 billion cubic feet or so of gas at its Eris prospect on a permit bordering Chevron's Wheatstone ground, and the discovery could have serious implications for both companies.

Woodside has been unable to determine whether Eris is an independent field or part of the same reservoir as Wheatstone.

Deutsche Bank points out that production licenses are awarded on the basis of structures rather than exploration licenses.

Therefore, if Eris and Wheatstone are determined to be part of the same structure, the rights to the field will be awarded as a joint venture with ownership linked to each party's share of the reserves.

Wheatstone is much larger than Eris, which means Chevron would have greater control over the development in that case.

Deutsche expects Chevron will soon drill the boundary of its permit to determine whether it is indeed one field or two.

If it turns out to be a single field, the outcome for Woodside could be good or bad. On a positive note, the situation could lead to Woodside and Chevron resuming talks about the joint development of Pluto and Wheatstone, which the market has always deemed logical.

That would provide plenty of gas to allow Woodside to approve a second train at Pluto on time next year.

But if that does not occur, Chevron's larger stake means it could restrict Woodside's ability to access the gas as quickly as it would prefer.

jfreed@smh.com.au
 

 

Briefs

Gold

All that glitters The price of gold has extended its record-breaking run by rising above $US1195 an ounce for the first time in history on the London Bullion Market, following a purchase of IMF gold by Sri Lanka's central bank.

Insurance

Life's a glitch Tower, Australia's biggest specialist life insurer, said underlying profit rose 10 per cent to $74.5 million for the 12 months to September 30 on higher individual policy sales during the year. But net profit fell 32 per cent to $46.4 million as its investments were hit.

Energy

Ebb and flow Oil and gas producer Beach Petroleum says its full-year production will remain stable and has made bullish forecasts for its oil output in Egypt and Tanzania, and its key Cooper Basin assets in Australia.
 
Investment

Spending slows Business investment sagged in the wake of the financial crisis but looks unlikely to fall any further. Private sector capital spending fell 3.9 per cent in real terms and 5.4 per cent before adjusting for inflation in the September quarter, the Australian Bureau of Statistics said.

Entertainment

On the up Village Roadshow says its Gold Coast theme parks and film distribution division have performed better than expected in the new financial year. Its Sydney attractions had also delivered a "strong first quarter result".