Groves margined, WA News, jail list, Rich List and much more
February 2, 2010
Dear Mayne Report subscribers,
It took all day, but ABC Learning founder Eddie Groves has finally confessed to a margin call - sort of. Check out the statement lodged with the ASX at 4.39pm. Whilst David Ryan and executive director Martin Kemp revealed specific margin calls this morning, the company has only dribbled out more than 10 million shares of sales by Eddie and his wife Le Neve Groves as follows:
As at 2:30 pm (Brisbane time) on Wednesday 27 February 2008, as a result of margin calls, 1 of the company's directors has sold all of his shares and 3 of the company's directors have sold some of their shares in the company. An Appendix 3Y has been lodged in respect of each of these transactions. As at 2:30 pm (Brisbane time), the company is aware of the following information:
• The directors are legally or beneficially entitled to a total of 21,857,289 ordinary shares in the company (4.604% of the issued ordinary shares of the company);
• 21,057,289 of those shares are held pursuant to margin lending arrangements; and
• 1 director holds 695,000 shares pursuant to margin lending arrangements, however, that director has provided alternative security to the relevant margin lenders and it is therefore unlikely that margin calls will be made.
In accordance with its continuous disclosure obligations, the company will update the market on the trades by each director.
Persumably we get the specifics tomorrow. In other stories today, I've decided to have another crack at the WA News board at the forthcoming EGM. The rationale and arguments are explained in the full edition.
We've also got some more detail on family troubles at ABC Learning. From a governance point of view, it was just an accident waiting to happen.
Just as One-tel and HIH spurred on governance reform a few years back, the same will happen courtesy of MFS, Centro, Allco and ABC Learning. In each case, it was a case of bad governance equals bad performance.
The big question is whether anyone will go to jail.
Up until 2005, spindoctors for ASIC used to provide me with summaries of who they had sent to jail each year. Alas, they've suddenly become all unco-operative. After making three separate requests, we're sick of waiting and have updated the list ourselves.
Since ASIC was formed in 1991, more than 300 white collar criminals have been jailed, but there was no discernible pick up through the Howard years. It will be interesting to see if the current wave of collapses and criminalising serious cartel conduct combines to lift the corporate plod's long term jail rate above one every three weeks.
We've also been putting a power of work into the Mayne Report Rich List and have now identified more than 600 Australians who are worth more than $20 million. The aim is to get to 1000 and we should manage that before BRW produces its latest effort in May.
As you can tell, we love a good list, so today's edition also includes the beginnings of what will become a master list of director margin calls - those that are publicly disclosed, at least.
Enjoy the full edition and do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
It took all day, but ABC Learning founder Eddie Groves has finally confessed to a margin call - sort of. Check out the statement lodged with the ASX at 4.39pm. Whilst David Ryan and executive director Martin Kemp revealed specific margin calls this morning, the company has only dribbled out more than 10 million shares of sales by Eddie and his wife Le Neve Groves as follows:
As at 2:30 pm (Brisbane time) on Wednesday 27 February 2008, as a result of margin calls, 1 of the company's directors has sold all of his shares and 3 of the company's directors have sold some of their shares in the company. An Appendix 3Y has been lodged in respect of each of these transactions. As at 2:30 pm (Brisbane time), the company is aware of the following information:
• The directors are legally or beneficially entitled to a total of 21,857,289 ordinary shares in the company (4.604% of the issued ordinary shares of the company);
• 21,057,289 of those shares are held pursuant to margin lending arrangements; and
• 1 director holds 695,000 shares pursuant to margin lending arrangements, however, that director has provided alternative security to the relevant margin lenders and it is therefore unlikely that margin calls will be made.
In accordance with its continuous disclosure obligations, the company will update the market on the trades by each director.
Persumably we get the specifics tomorrow. In other stories today, I've decided to have another crack at the WA News board at the forthcoming EGM. The rationale and arguments are explained in the full edition.
We've also got some more detail on family troubles at ABC Learning. From a governance point of view, it was just an accident waiting to happen.
Just as One-tel and HIH spurred on governance reform a few years back, the same will happen courtesy of MFS, Centro, Allco and ABC Learning. In each case, it was a case of bad governance equals bad performance.
The big question is whether anyone will go to jail.
Up until 2005, spindoctors for ASIC used to provide me with summaries of who they had sent to jail each year. Alas, they've suddenly become all unco-operative. After making three separate requests, we're sick of waiting and have updated the list ourselves.
Since ASIC was formed in 1991, more than 300 white collar criminals have been jailed, but there was no discernible pick up through the Howard years. It will be interesting to see if the current wave of collapses and criminalising serious cartel conduct combines to lift the corporate plod's long term jail rate above one every three weeks.
We've also been putting a power of work into the Mayne Report Rich List and have now identified more than 600 Australians who are worth more than $20 million. The aim is to get to 1000 and we should manage that before BRW produces its latest effort in May.
As you can tell, we love a good list, so today's edition also includes the beginnings of what will become a master list of director margin calls - those that are publicly disclosed, at least.
Enjoy the full edition and do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
Running again for the WAN board
Dear Mayne Report subscribers,
Having twice run for the board of West Australian Newspapers, including at last year's AGM, I've decided to throw my hat into the ring at the forthcoming EGM called by billionaire Kerry Stokes and the Seven Network.
The saga has rolled out as follows:
February 25: Seven calls for EGM and launches vitriolic attack on WAN board, whilst WAN releases Seven's formal requistion.
February 26: WAN sends 3-page letter to shareholder explaining background and pointing to Seven's alleged conflicts of interest.
February 27: Seven releases exchange of letters with WAN with regards to the ridiculously tight deadline for nominations.
Like with most disputes, the arguments run both ways. Stokes is a controversial figure who could indeed win control of the WAN board room with a 19% stake acquired without paying a proper control premium. Then again, the likes of Frank Lowy at Westfield and Rupert Murdoch at News Corp have smaller stakes in their companies but clearly control the boardroom, although they did build the companies from nothing.
The Stokes proposal to sack all the non-executive directors seems excessive. Any board needs continuity so it would have made more sense to simply call a meeting to remove obstinate chairman Peter Mansell and inject two of Seven's representatives onto the board.
The idea that WAN's non-Seven shareholders will come up with three of their own nominees is silly. Who would be chairman?
I reckon Mansell has to go because he has failed to take action against the universally loathed editor of The West Australian, Paul Armstrong.
Besides, Mansell is literally the busiest man in corporate Australia, chairing five companies and sitting on two other boards. He's got a new CEO and the Allegiance Mining takeover to bed down at Zinifex so that chair needs more than one day a week of his time.
The current WAN board doesn't have any media experience, so I've decided to have a crack after polling a respectable 15.44% last year, as is explained in this detailed account sent to subscribers at the time.
An even better candidate would be someone like Steve Harris, the former editor-in-chief of the Herald Sun and chief executive of The Age who recently departed as CEO of the Melbourne Football Club. I'm trying to track him down but the WAN has set a ridiculous deadline of this Friday, presumably to limit the number of outside candidates.
Having twice run for the board of West Australian Newspapers, including at last year's AGM, I've decided to throw my hat into the ring at the forthcoming EGM called by billionaire Kerry Stokes and the Seven Network.
The saga has rolled out as follows:
February 25: Seven calls for EGM and launches vitriolic attack on WAN board, whilst WAN releases Seven's formal requistion.
February 26: WAN sends 3-page letter to shareholder explaining background and pointing to Seven's alleged conflicts of interest.
February 27: Seven releases exchange of letters with WAN with regards to the ridiculously tight deadline for nominations.
Like with most disputes, the arguments run both ways. Stokes is a controversial figure who could indeed win control of the WAN board room with a 19% stake acquired without paying a proper control premium. Then again, the likes of Frank Lowy at Westfield and Rupert Murdoch at News Corp have smaller stakes in their companies but clearly control the boardroom, although they did build the companies from nothing.
The Stokes proposal to sack all the non-executive directors seems excessive. Any board needs continuity so it would have made more sense to simply call a meeting to remove obstinate chairman Peter Mansell and inject two of Seven's representatives onto the board.
The idea that WAN's non-Seven shareholders will come up with three of their own nominees is silly. Who would be chairman?
I reckon Mansell has to go because he has failed to take action against the universally loathed editor of The West Australian, Paul Armstrong.
Besides, Mansell is literally the busiest man in corporate Australia, chairing five companies and sitting on two other boards. He's got a new CEO and the Allegiance Mining takeover to bed down at Zinifex so that chair needs more than one day a week of his time.
The current WAN board doesn't have any media experience, so I've decided to have a crack after polling a respectable 15.44% last year, as is explained in this detailed account sent to subscribers at the time.
An even better candidate would be someone like Steve Harris, the former editor-in-chief of the Herald Sun and chief executive of The Age who recently departed as CEO of the Melbourne Football Club. I'm trying to track him down but the WAN has set a ridiculous deadline of this Friday, presumably to limit the number of outside candidates.
Eddie Groves and trouble with the in-laws
There are plenty of reasons not to like ABC Learning, as was explained in this piece on Crikey today. A couple of extras are that Eddie Groves invested in Austock, the broking house which had so strongly backed the company and he refused to answer most of my questions at this EGM in 2006 approving a $600 million capital raising.
However, the most disturbing governance issue was revealed in this Courier Mail story last September, when we learnt about more than $100 million of maintenance and construction work going to Eddie's brother-in-law, Frank Zullo, most of it untendered.
ABC Learning stopped disclosing these related party dealings in the 2006-07 annual report and it seems this is because of a family bust-up.
Zullo is married to Eddie's sister Lorie, although analysts have described him as "a former family member". There has been no formal divorce registered in Queensland, but the suggestion is that they have separated. So who is going to build those promised 70 new Australasian centres in 2008-09? Whose side has Eddie taken?
The brother-in-law relationship was noted in the 2001 prospectus for the ABC Learning float and was again mentioned in RP Data land documents as recently as September 2006, which makes non-disclosure of the dealings that financial year even more disturbing.
ABC Learning shares remain suspended pending some vague promise of potential asset sales. I reckon it sounds more like an opportunity to sort out further margin calls and that late statement today strengthens the theory.
Eddie is certainly copping a huge run in the press and I didn't hold back in this chat with Deborah Cameron on ABC Sydney and last night's discussion with Lindy Burns on ABC Melbourne.
He really should be sacked for blowing $1 billion of other people's money. Leading the charge should be the biggest shareholder, Singapore Inc, but the idea of a foreign government choosing who should look after 40,000 Australian toddlers each day is just too bizarre to contemplate.
However, the most disturbing governance issue was revealed in this Courier Mail story last September, when we learnt about more than $100 million of maintenance and construction work going to Eddie's brother-in-law, Frank Zullo, most of it untendered.
ABC Learning stopped disclosing these related party dealings in the 2006-07 annual report and it seems this is because of a family bust-up.
Zullo is married to Eddie's sister Lorie, although analysts have described him as "a former family member". There has been no formal divorce registered in Queensland, but the suggestion is that they have separated. So who is going to build those promised 70 new Australasian centres in 2008-09? Whose side has Eddie taken?
The brother-in-law relationship was noted in the 2001 prospectus for the ABC Learning float and was again mentioned in RP Data land documents as recently as September 2006, which makes non-disclosure of the dealings that financial year even more disturbing.
ABC Learning shares remain suspended pending some vague promise of potential asset sales. I reckon it sounds more like an opportunity to sort out further margin calls and that late statement today strengthens the theory.
Eddie is certainly copping a huge run in the press and I didn't hold back in this chat with Deborah Cameron on ABC Sydney and last night's discussion with Lindy Burns on ABC Melbourne.
He really should be sacked for blowing $1 billion of other people's money. Leading the charge should be the biggest shareholder, Singapore Inc, but the idea of a foreign government choosing who should look after 40,000 Australian toddlers each day is just too bizarre to contemplate.
Bill Express under the pump
Bill Express is the publicly listed company headquartered closest to our home so we like to keep an eye on the activities of this software outfit.
Check out this letter to newsagents that went out from Bill Express last week.
The essence is that a marketing contribution paid by Bill Express to newsagents to help fund the IT infrastructure has been withdrawn. Bill Express have therefore upset their retail partners because newsagents are talking of going on strike and cancelling contracts. This would severely disrupt Bill Express - a business which isn't exactly travelling well having seen its shares fall from 24c to 14.5c in nine months.
Newsagents have effectively funded Bill Express through lease arrangements for old hardware, but these leases are coming to an end - hence the latest moves. This is what the newsagents federation sent out late last week:
Notice from Bill EXPRESS regarding Phased Removal of Bill EXPRESS Marketing Subsidy
You may recently have received an announcement from Bill EXPRESS advising members of the Bill EXPRESS network that it intends to withdraw its marketing subsidy to newsagents of up to $200 per month.
We consider the Bill EXPRESS announcement misrepresents the ANF's position on withdrawal of the subsidy. By releasing this announcement without the ANF's approval, Bill EXPRESS did not act in accordance with its obligations to the ANF. The ANF wishes to advise it does not endorse or approve withdrawal of the subsidy by Bill EXPRESS and we are very disappointed it has taken this step. In many cases withdrawal of the subsidy may result in Bill EXPRESS ceasing to be a viable service for newsagents.
The Agreement providing Bill EXPRESS with access to the ANF newsagent channel is due to expire in the next few months. In light of recent developments, the ANF is presently considering options for alternative partnerships so that it can ensure its members continue to receive access to competitive services and for proper reward.
Developing.
Check out this letter to newsagents that went out from Bill Express last week.
The essence is that a marketing contribution paid by Bill Express to newsagents to help fund the IT infrastructure has been withdrawn. Bill Express have therefore upset their retail partners because newsagents are talking of going on strike and cancelling contracts. This would severely disrupt Bill Express - a business which isn't exactly travelling well having seen its shares fall from 24c to 14.5c in nine months.
Newsagents have effectively funded Bill Express through lease arrangements for old hardware, but these leases are coming to an end - hence the latest moves. This is what the newsagents federation sent out late last week:
Notice from Bill EXPRESS regarding Phased Removal of Bill EXPRESS Marketing Subsidy
You may recently have received an announcement from Bill EXPRESS advising members of the Bill EXPRESS network that it intends to withdraw its marketing subsidy to newsagents of up to $200 per month.
We consider the Bill EXPRESS announcement misrepresents the ANF's position on withdrawal of the subsidy. By releasing this announcement without the ANF's approval, Bill EXPRESS did not act in accordance with its obligations to the ANF. The ANF wishes to advise it does not endorse or approve withdrawal of the subsidy by Bill EXPRESS and we are very disappointed it has taken this step. In many cases withdrawal of the subsidy may result in Bill EXPRESS ceasing to be a viable service for newsagents.
The Agreement providing Bill EXPRESS with access to the ANF newsagent channel is due to expire in the next few months. In light of recent developments, the ANF is presently considering options for alternative partnerships so that it can ensure its members continue to receive access to competitive services and for proper reward.
Developing.