WA News board tilt and market bedlam
March 10, 2008
Dear Mayne Report subscribers,
at 4.50pm this afternoon, I faxed the snooty company secretary of WA News, Bernard "I don't return calls" Yates, with a formal nomination to stand for the board at the EGM on April 23.
This is a backflip from earlier plans but having booked flights to Perth for the April 23 meeting, I decided that a board tilt was appropriate, if only to highlight the no vacancy rort which WAN is using like so many other listed companies. All is explained in this video and the nomination letter is in the full edition.
Having started covering financial markets in January 1989, I can't recall a week quite like what we've just seen. There are credit crisis victims everywhere, the value of our Big Four banks is down by more than $100 billion since November and we are seeing lots of panic selling from a credit system which has frozen up.
The directors of ABC Learning have today been margin called out of the balance of their shares, lifting the total sales by $45 million to almost $100 million. Meanwhile, Babcock & Brown's empire is starting to plunge, yet they had the cheek to snap up 5% stakes in two of Allco's Rubicon funds this week.
Today's edition includes stories on Twiggy Forrest replacing James Packer atop the Rich List, Challenger Financial Group, ABC Learning and the rapidly growing list of assets up for sale. The problem is, who wants to buy anything?
Well, I'm a mug and bought $500 worth of stock in the following four companies today: Cooper Energy, Forge Group, Innamincka Petroelum and Multiplex European units.
The $200,000 portfolio is now more than $40,000 underwater, but the margin loan is below $10,000 so there's plenty of headroom yet.
Do ya best, Stephen Mayne
at 4.50pm this afternoon, I faxed the snooty company secretary of WA News, Bernard "I don't return calls" Yates, with a formal nomination to stand for the board at the EGM on April 23.
This is a backflip from earlier plans but having booked flights to Perth for the April 23 meeting, I decided that a board tilt was appropriate, if only to highlight the no vacancy rort which WAN is using like so many other listed companies. All is explained in this video and the nomination letter is in the full edition.
Having started covering financial markets in January 1989, I can't recall a week quite like what we've just seen. There are credit crisis victims everywhere, the value of our Big Four banks is down by more than $100 billion since November and we are seeing lots of panic selling from a credit system which has frozen up.
The directors of ABC Learning have today been margin called out of the balance of their shares, lifting the total sales by $45 million to almost $100 million. Meanwhile, Babcock & Brown's empire is starting to plunge, yet they had the cheek to snap up 5% stakes in two of Allco's Rubicon funds this week.
Today's edition includes stories on Twiggy Forrest replacing James Packer atop the Rich List, Challenger Financial Group, ABC Learning and the rapidly growing list of assets up for sale. The problem is, who wants to buy anything?
Well, I'm a mug and bought $500 worth of stock in the following four companies today: Cooper Energy, Forge Group, Innamincka Petroelum and Multiplex European units.
The $200,000 portfolio is now more than $40,000 underwater, but the margin loan is below $10,000 so there's plenty of headroom yet.
Do ya best, Stephen Mayne
Challenger under the pump, Packer surrenders Richest Aussie crown
If you thought that the Packer family made a good profit from its investment in Fairfax when it cashed out for more than $400 million in 2001, think again.
Those monies largely stayed inside what is now the Challenger Financial Group which has today plunged 37c to $1.60 on fears it could be the next major victim of the global credit crunch.
Challenger claims it is only geared to 9%, but The Australian's Adele Ferguson blew that one away in this story a few days ago that looks like it came from her favourite tipper, Wilson HTM's banking analyst Brett Le Mesurier.
This contagion is just extraordinary and Challenger is now on our biggest share price tanks list, having plunged from a peak of $6.20 just four months ago.
The company should be awfully relieved that it pocketed a $200 million capital injection from Bank of Tokyo-Mitsubishi at more than $5 a share in November. That's almost as bad as the huge haircut the Singapore Government copped paying $403 million last June for 12% of ABC Learning at $7.30 a share.
As I wrote in Crikey today, James Packer has clearly now surrendered the title of "Australia's richest man" to Andrew Forrest, whose Fortescue Metals stock only dropped 18c to $8.10 today, valuing Twiggy's holding at a staggering $8.28 billion.
Poor old James Packer has seen the value of his 20% stake in Challenger plunge from $756 million last November to just $195 million at the close of trade today. Similarly, James also saw his 37% stake in Consolidated Media Holdings plunge by more than $100 million today after Lachlan Murdoch's private equity backers pulled out of the $3.3 billion privatisation deal.
His increasingly geared casino play Crown has also plunged from more than $14 to today's record low of $10.17 in just three months since the demerger from the media business. It looks like the Packer wealth could be back below $7 billion, so the real debate now is whether Twiggy is richer than the Murdoch family.
With News Corp shares falling 2% to a 28-month low today, I reckon it has probably already happened.
Those monies largely stayed inside what is now the Challenger Financial Group which has today plunged 37c to $1.60 on fears it could be the next major victim of the global credit crunch.
Challenger claims it is only geared to 9%, but The Australian's Adele Ferguson blew that one away in this story a few days ago that looks like it came from her favourite tipper, Wilson HTM's banking analyst Brett Le Mesurier.
This contagion is just extraordinary and Challenger is now on our biggest share price tanks list, having plunged from a peak of $6.20 just four months ago.
The company should be awfully relieved that it pocketed a $200 million capital injection from Bank of Tokyo-Mitsubishi at more than $5 a share in November. That's almost as bad as the huge haircut the Singapore Government copped paying $403 million last June for 12% of ABC Learning at $7.30 a share.
As I wrote in Crikey today, James Packer has clearly now surrendered the title of "Australia's richest man" to Andrew Forrest, whose Fortescue Metals stock only dropped 18c to $8.10 today, valuing Twiggy's holding at a staggering $8.28 billion.
Poor old James Packer has seen the value of his 20% stake in Challenger plunge from $756 million last November to just $195 million at the close of trade today. Similarly, James also saw his 37% stake in Consolidated Media Holdings plunge by more than $100 million today after Lachlan Murdoch's private equity backers pulled out of the $3.3 billion privatisation deal.
His increasingly geared casino play Crown has also plunged from more than $14 to today's record low of $10.17 in just three months since the demerger from the media business. It looks like the Packer wealth could be back below $7 billion, so the real debate now is whether Twiggy is richer than the Murdoch family.
With News Corp shares falling 2% to a 28-month low today, I reckon it has probably already happened.
Watching Eddy Groves becomes a Business Spectator bloodsport
Wayne Swan might have pushed ASIC and the ASX into some more belated tough talk yesterday on margin lending and short selling, but it's all too late for ABC founder Eddy Groves.
In an era of robotic CEOs who rarely deviate from the script, Groves absolutely let fly in this extraordinary interview with the Business Spectator KGB team yesterday that was published at 1.25pm.
I read Eddy's belligerent, triumphant and defiant claims and expected the stock to soar but as Robert Gottliebsen explained this morning, the interview instead sent the shares into another swan dive. Luckily for Eddie, his wife Le Neve and fellow executive director Martin Kemp, they were all margin sold out of their shares yesterday at prices north of $2, as this story explains.
When doing a huge strategy about-face such as Eddy's Morgan Stanley private equity deal, you've got to provide the market with more than a cursory 6 page briefing which is light on detail.
The KGB interview took the whole saga a lot further but at the end of the day, Eddy served up a whinge-fest and came across as someone who refused to concede an inch. He also declared war on the investment community, especially by singling out Citigroup analyst Jenny Owen.
On the surface, it does seem extraordinary that Citigroup published Owen's report suggesting ABC Learning was in breach of its lending covenants before checking with the company and then sold Eddy up without giving him any warning.
Alan Kohler has calmly assessed all the detail in this piece today and sheets much of the blame back to the way Eddy runs the company and deals with the financial community. Owen certainly didn't take a backward step, releasing another savage report yesterday which was widely picked up by media outlets such as Lateline Business.
The market is an unforgiving beast and ABC Learning shares today plunged 28c to $1.47 as its market capitalisation fell below $700 million.
At these levels, no wonderr the remaining heavily geared 4.6% stake held in the boardroom has already been cleaned out.
There were some mixed messages in the KGB interview. At one point Eddy belligerently declared:
“Now if I had a phone call on that particular day saying ‘can you reduce your exposure because the shares have fallen', I could have written out some money for cash and reduced the stock. I never got that opportunity. We never even got a phone call. The stock was sold before I even blinked an eye.”
But then asked if he would rebuild his stake, Eddy responded: “Yeah, but you've got to have equity. How do you do that?”
With the margin calls complete, the game now moves onto whether Eddy can survive increasing demands for his resignation. Once that happens, the worry then becomes that Morgan Stanley does a Lachlan Murdoch. Without the US deal, that banking covenant requiring shareholder funds of $2 billion looks like a tough call for the new auditor, Ernst & Young's Sydney heavyweight Brian Long, when the market is valuing the business at less than $700 million.
Then again, Brian is the bloke back in 2003 who said AMP's claimed $18 billion in net assets was accurate when the market capitalisation was below $5 billion.
In an era of robotic CEOs who rarely deviate from the script, Groves absolutely let fly in this extraordinary interview with the Business Spectator KGB team yesterday that was published at 1.25pm.
I read Eddy's belligerent, triumphant and defiant claims and expected the stock to soar but as Robert Gottliebsen explained this morning, the interview instead sent the shares into another swan dive. Luckily for Eddie, his wife Le Neve and fellow executive director Martin Kemp, they were all margin sold out of their shares yesterday at prices north of $2, as this story explains.
When doing a huge strategy about-face such as Eddy's Morgan Stanley private equity deal, you've got to provide the market with more than a cursory 6 page briefing which is light on detail.
The KGB interview took the whole saga a lot further but at the end of the day, Eddy served up a whinge-fest and came across as someone who refused to concede an inch. He also declared war on the investment community, especially by singling out Citigroup analyst Jenny Owen.
On the surface, it does seem extraordinary that Citigroup published Owen's report suggesting ABC Learning was in breach of its lending covenants before checking with the company and then sold Eddy up without giving him any warning.
Alan Kohler has calmly assessed all the detail in this piece today and sheets much of the blame back to the way Eddy runs the company and deals with the financial community. Owen certainly didn't take a backward step, releasing another savage report yesterday which was widely picked up by media outlets such as Lateline Business.
The market is an unforgiving beast and ABC Learning shares today plunged 28c to $1.47 as its market capitalisation fell below $700 million.
At these levels, no wonderr the remaining heavily geared 4.6% stake held in the boardroom has already been cleaned out.
There were some mixed messages in the KGB interview. At one point Eddy belligerently declared:
“Now if I had a phone call on that particular day saying ‘can you reduce your exposure because the shares have fallen', I could have written out some money for cash and reduced the stock. I never got that opportunity. We never even got a phone call. The stock was sold before I even blinked an eye.”
But then asked if he would rebuild his stake, Eddy responded: “Yeah, but you've got to have equity. How do you do that?”
With the margin calls complete, the game now moves onto whether Eddy can survive increasing demands for his resignation. Once that happens, the worry then becomes that Morgan Stanley does a Lachlan Murdoch. Without the US deal, that banking covenant requiring shareholder funds of $2 billion looks like a tough call for the new auditor, Ernst & Young's Sydney heavyweight Brian Long, when the market is valuing the business at less than $700 million.
Then again, Brian is the bloke back in 2003 who said AMP's claimed $18 billion in net assets was accurate when the market capitalisation was below $5 billion.
The great 2008 fire sale
It's a global fire sale folks, so we're going to track exactly what has been sold and what is going under the hammer in the coming months. Here's an initial crack and feel free to send through any I've missed to stephen@maynereport.com.
Sold so far
ABC Learning: 60% of US operation sold to Morgan Stanley Private Equity, but will the deal fall over?
MFS: Stella tourism assets sold to private equity firm CVC. Also fire sold stake in Babcock & Brown Communities, HFA Holdings, MFS Diversified, some retirement assets held with AMP and the Joe Gersch property business. Mostly whilst suspended.
Allco: has been cleaned out of Rubicon trusts by Credit Suisse margin call and dropped $72 million failing to complete $1.6 billion US power station purchase.
Mirvac: avoided direct assets by selling a $300 million placement to Dubai property developer Nakheel, lifting its stake to 12%.
Up for sale
Babcock & Brown Infrastructure: reviewing non-core assets to reduce $7.5 billion debt pile. Stock plunged 6c to record low of 91.5c today, so am relieved I bailed out of the $5000 share purchase plan at $1.31 last month.
Babcock & Brown Environment: attempting to flog large European windfarm portfolio
City Pacific: attempting to flog part of the enormous $650 million Martha's Cove development on the Mornington Peninsula and various other assets.
Rubicon trusts: attempting to flog billions in global property holdings to pay down debt.
Allco: attempting to flog 50% of World Square in Sydney which is in the books at $400 million. Margin sold out of various Rubicon Trust investments by Credit Suisse.
ABC Learning: UK vouchers business which it hopes to sell for more than $200 million.
Tricom: Bell Financial Group is starting to look very wobbly on this one.
ABC Learning: 60% of US operation sold to Morgan Stanley Private Equity, but will the deal fall over?
MFS: Stella tourism assets sold to private equity firm CVC. Also fire sold stake in Babcock & Brown Communities, HFA Holdings, MFS Diversified, some retirement assets held with AMP and the Joe Gersch property business. Mostly whilst suspended.
Allco: has been cleaned out of Rubicon trusts by Credit Suisse margin call and dropped $72 million failing to complete $1.6 billion US power station purchase.
Mirvac: avoided direct assets by selling a $300 million placement to Dubai property developer Nakheel, lifting its stake to 12%.
Up for sale
Babcock & Brown Infrastructure: reviewing non-core assets to reduce $7.5 billion debt pile. Stock plunged 6c to record low of 91.5c today, so am relieved I bailed out of the $5000 share purchase plan at $1.31 last month.
Babcock & Brown Environment: attempting to flog large European windfarm portfolio
City Pacific: attempting to flog part of the enormous $650 million Martha's Cove development on the Mornington Peninsula and various other assets.
Rubicon trusts: attempting to flog billions in global property holdings to pay down debt.
Allco: attempting to flog 50% of World Square in Sydney which is in the books at $400 million. Margin sold out of various Rubicon Trust investments by Credit Suisse.
ABC Learning: UK vouchers business which it hopes to sell for more than $200 million.
Tricom: Bell Financial Group is starting to look very wobbly on this one.
The nomination letter for WA News tilt
This was faxed through, along with a nomination letter from WAN shareholder Paula Piccinini, at 4.50pm AEST, well before the deadline of 5pm WST.
The Company Secretary
Mr BO Yates
West Australian Newspaper Holdings Ltd
50 Hasler Rd
Osborne Park, 6017
By fax (08) 9323 2033
Friday, March 7, 2008
Dear Mr Yates,
Please accept this letter as my formal consent to nominate for the board of West Australian Newspaper Holdings Ltd at the forthcoming extraordinary general meeting of shareholders to be held in Perth on April 23, 2008. My wife and WA News shareholder, Paula Piccinini, is supporting the nomination and I am the registered owner of 35 WAN shares at the address PO Box 925, Templestowe 3106. Please include the following CV and platform to be printed in the notice of meeting and distributed to WAN shareholders:
"Stephen Mayne, age 38. Bcom (Melb). Stephen Mayne is a Walkley Award winning business journalist who has worked for a range of Australian newspapers including the Herald Sun, The Daily Telegraph, The Age and The Australian Financial Review as a reporter, columnist, business editor and chief of staff. He was the founder of www.crikey.com.au, Australia's best known independent ezine, and now publishes the corporate governance ezine www.maynereport.com. Mr Mayne is Australia's leading shareholder advocate and believes the WAN board needs more directors with journalistic and internet experience who are independent of The Seven Network and the incumbent directors. He also believes the company should replace The West Australian's editor, Paul Armstrong, to stabilise the newspaper after an erratic period of mixed performance.”
My only request in this election process is that you allow shareholders to determine the size of the board. Any candidate who receives more votes in favour than against should be elected subject to the maximum prescribed in the company's constitution.
I trust that the position on the notice paper will be determined by ballot and request that you consult with me before editing the proposed platform. I would also request that all candidates be allowed to address the meeting for up to five minutes. I look forward to receiving an up-to-date list of WAN's top 200 beneficial shareholders for the purposes of proxy solicitation. Could you please confirm your receipt and acceptance of this nomination by email to smayne@crikey.com.au or by phone to (0412) 106 241 or fax to (03) 9846 7887.
Yours Sincerely
Stephen Mayne ——————————
It will be interesting to see if the Armstrong line survives and how the company justifies claiming there is only 4 vacancies. Afterall, as Zinifex chairman Peter Mansell happily doubled the size of the board this week as part of the Oxiana merger. He should do the same with WA News, if that's what the shareholders want.
Do ya best, Stephen Mayne
Mr BO Yates
West Australian Newspaper Holdings Ltd
50 Hasler Rd
Osborne Park, 6017
By fax (08) 9323 2033
Friday, March 7, 2008
Dear Mr Yates,
Please accept this letter as my formal consent to nominate for the board of West Australian Newspaper Holdings Ltd at the forthcoming extraordinary general meeting of shareholders to be held in Perth on April 23, 2008. My wife and WA News shareholder, Paula Piccinini, is supporting the nomination and I am the registered owner of 35 WAN shares at the address PO Box 925, Templestowe 3106. Please include the following CV and platform to be printed in the notice of meeting and distributed to WAN shareholders:
"Stephen Mayne, age 38. Bcom (Melb). Stephen Mayne is a Walkley Award winning business journalist who has worked for a range of Australian newspapers including the Herald Sun, The Daily Telegraph, The Age and The Australian Financial Review as a reporter, columnist, business editor and chief of staff. He was the founder of www.crikey.com.au, Australia's best known independent ezine, and now publishes the corporate governance ezine www.maynereport.com. Mr Mayne is Australia's leading shareholder advocate and believes the WAN board needs more directors with journalistic and internet experience who are independent of The Seven Network and the incumbent directors. He also believes the company should replace The West Australian's editor, Paul Armstrong, to stabilise the newspaper after an erratic period of mixed performance.”
My only request in this election process is that you allow shareholders to determine the size of the board. Any candidate who receives more votes in favour than against should be elected subject to the maximum prescribed in the company's constitution.
I trust that the position on the notice paper will be determined by ballot and request that you consult with me before editing the proposed platform. I would also request that all candidates be allowed to address the meeting for up to five minutes. I look forward to receiving an up-to-date list of WAN's top 200 beneficial shareholders for the purposes of proxy solicitation. Could you please confirm your receipt and acceptance of this nomination by email to smayne@crikey.com.au or by phone to (0412) 106 241 or fax to (03) 9846 7887.
Yours Sincerely
Stephen Mayne ——————————
It will be interesting to see if the Armstrong line survives and how the company justifies claiming there is only 4 vacancies. Afterall, as Zinifex chairman Peter Mansell happily doubled the size of the board this week as part of the Oxiana merger. He should do the same with WA News, if that's what the shareholders want.
Do ya best, Stephen Mayne