Activist funds, Macquarie debt rumours, BB Wind, Fortescue, Centro and Cape Lambert
February 2, 2010
Dear Mayne Reporters,
Has Macquarie sicked ASIC onto Adele Ferguson's favourite source?
The corporate plod released this statement after 5pm today promising to get tough on people spreading false rumours. It was intriguing that ASIC specifically identified Macquarie Group as a potential victim of false rumours when the Millionaires Factory lashed out at The Australian this morning for what looks like a reckless story by Adele Ferguson claiming it must refinance $45 billion in debt by March next year.
Wilson HTM banking analyst Brett Le Mesurier is Ferguson's most often-quoted source. His name has appeared in 31 different articles by Ferguson in The Australian over the over the past 18 months and he clearly doesn't like Macquarie if you can believe this extract from Gideon Haigh's excellent cover story on Macquarie for The Monthly last year:
Its reputation, moreover, is for being prickly, even hostile, when criticised. When Business Review Weekly was preparing a cover story on Macquarie three years ago, the bank started issuing complaints to the magazine's proprietor, John Fairfax Group, even before publication. Two years ago, transport academic Dr John Goldberg published a paper casting doubt on the viability of the M2 Motorway and the Lane Cove and Cross City tunnels; the bank not only complained to the University of Sydney, where he was an honorary associate, but demanded the university disassociate itself from his comments. Whatever the rights and wrongs of Goldberg's critique, it seemed needlessly heavy-handed. Likewise the response to the Wilson HTM analyst Brett Le Mesurier, who was told recently that he was being denied access to management because he had had the temerity to write a note to clients comparing Macquarie to its smaller rival Babcock & Brown. "Of course," says the puckish Le Mesurier, "that just encourages me."
Ferguson and Le Mesurier might like stirring Macquarie, but in the current environment you just can't say a bank has $45 billion repayable in 9 months if it is not true - especially when Macquarie is already suing The Australian for defamation over the Walkley Award winning Beaconsfield gold mine coverage by Michael West.
It is not clear if Le Mesurier was Ferguson's source today, but he was quoted further on in her column about Babcock. It will be very interesting to see how The Australian covers this issue tomorrow.
Let's hope they report that ASIC interviewed Le Mesurier at 3pm this afternoon!
Activist funds
I gave a robust 28-minute presentation to a group of fund managers in Melbourne yesterday and hopefully made the case that the time is nigh for the establishment of some Australian-based activist funds. Lo and behold, we've seen three more activist fund developments over the past 24 hours and, as usual, all of them involve offshore players.
Orbis moves on Centro Retail
The first was the move by global investment manager Orbis to lifts its stake in Centro Retail to 11.86%, making it the largest independent shareholder.
Centro Retail is running one of Australia's most inaccurate balance sheets at the moment, as after more than $1 billion in write-downs it still claims to have net tangible assets of $1.27 per unit. The stock closed at 11.5c tonight, valuing the whole company at $270 million, so clearly the directors have to either realise the value or further write-down the assets.
I'm running for the Centro Retail board at the November 27 AGM on the platform that it needs some directors who are independent of Centro Properties Group. This is a governance no brainer given the "mirror boards" and I'll be making contact with the Orbis Sydney office shortly.
Cape Lambert Iron EGM
The PO Box is bulging at the moment with notices of meeting for the AGM season. The most interesting offering today - apart from a dividend cheque of $4.90 from Babcock & Brown Infrastructure when these clowns should be conserving all cash to service that $9 billion debt - was this notice of meeting for a hostile EGM at Cape Lambert Iron Ore Ltd.
We know that Perth mining plays can be the Wild West, but the Cape Lambert saga is right up there. The wannabe iron-ore producer recently sold its namesake Cape Lambert iron ore prospect to the Chinese government for $400 million and Federal Treasurer Wayne Swan duly gave his approval.
Controversial Russian steelmaker Evras bought a 19.9% stake and threatened to stymie the Chinese sale, but then all went quiet and shareholders approved the sale. The Cape Lambert board was subsequently dismayed when the Chinese did a separate deal with Evras to give it 75% of the project. That would have have raised plenty of eyebrows at the Foreign Investment Review Board, especially given recent events in Georgia, and The Australian's respected columnist Bryan Frith has called for regulatory action.
Meanwhile, a bloke called Mich Shemedian, whose investment vehicle Power United is registered in Brussells and Hong Kong in this substantial shareholder statement, has bought 11% and is now attempting to remove managing director Tony Sage for ploughing some of the Chinese cash into what sounds like a very dodgy African mining play in Sierra Leone.
What makes Dubai-based Shemedian more interesting is that he's also proposing to appoint Melbourne-based muscle car enthusiast and former Opes Prime customer Leo "the Gun" Khouri to the board. You can read about him in The Age.
Kiddies activist comes Down Under
The biggest news today is that The Children's Investment Fund has popped up on the register of Babcock & Brown Wind Partners with a 5.29% stake after shelling out about $50 million for 45 million shares over the past few weeks.
Chris Hohn's $10 billion activist fund is famed for shaking up boards and this is a welcome development, although the troublemaking kiddies are still under water on their investment even after units in BBW soared 17.5c to $1.06 today. Hohn will presumably wants something more dramatic than BBW's 10% on-market buyback which was announced yesterday morning.
Here is the data from one of the slides in yesterday's presentation pointing out that there is money for jam for activists to shake up the numerous third party managed Australian vehicles that are trading way below claimed net tangible assets:
Macquarie Infrastructure Group: NTA $3.84, market price $2.05 - $4 billion of missing value
Macquarie Airports: NTA $4.57, last close $2.58 - $3.5 billion of missing value
Allco Equity Partners: NTA $5.52, $1.02 in cash, last close $1.95 - $351 million of missing value
GPT: NTA $3.68, last close $1.61 - $4.5 billion of missing value
Whilst GPT is different because it is internally managed and has more than $4 billion in debt, there is an option to shake up the board and management which hasn't changed since the share price plunged.
MIG and MAP also have plenty of debt at the asset level, but AEP is a cash box with no debt that is simply being shunned because of its name. Easy pickings for someone to grab 5% and then call a meeting to at first change the name and later internalise the management or return the cash.
Fortescue under the pump
Andrew Forrest's Fortescue Metals isn't looking too flash after plunging 37c to an eight month low of $5.22 today. The market is still awaiting the full years results although ASX spin doctor Matthew Gibbs explained the delay with this email today:
Fortescue has until 30 September to report. Exploration companies are not subject to the two-month reporting deadline. For half-year results they have two-and-a-half months to lodge final reports. For the full-year they have three months, as per the Corps Act, section 319. Fortescue is still classified as an explorer. It may be re-classified after the September quarter if it continues to produce.
The market hates uncertainty at the moment and with all those rumours flying around about Fortescue, you would think an early release of the results would make sense. Forrest surely isn't enjoying seeing his wealth tumble to $5 billion, such that he's now not even Australia's bronze medallist on the Rich List stakes.
That's all for now.
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.
Has Macquarie sicked ASIC onto Adele Ferguson's favourite source?
The corporate plod released this statement after 5pm today promising to get tough on people spreading false rumours. It was intriguing that ASIC specifically identified Macquarie Group as a potential victim of false rumours when the Millionaires Factory lashed out at The Australian this morning for what looks like a reckless story by Adele Ferguson claiming it must refinance $45 billion in debt by March next year.
Wilson HTM banking analyst Brett Le Mesurier is Ferguson's most often-quoted source. His name has appeared in 31 different articles by Ferguson in The Australian over the over the past 18 months and he clearly doesn't like Macquarie if you can believe this extract from Gideon Haigh's excellent cover story on Macquarie for The Monthly last year:
Its reputation, moreover, is for being prickly, even hostile, when criticised. When Business Review Weekly was preparing a cover story on Macquarie three years ago, the bank started issuing complaints to the magazine's proprietor, John Fairfax Group, even before publication. Two years ago, transport academic Dr John Goldberg published a paper casting doubt on the viability of the M2 Motorway and the Lane Cove and Cross City tunnels; the bank not only complained to the University of Sydney, where he was an honorary associate, but demanded the university disassociate itself from his comments. Whatever the rights and wrongs of Goldberg's critique, it seemed needlessly heavy-handed. Likewise the response to the Wilson HTM analyst Brett Le Mesurier, who was told recently that he was being denied access to management because he had had the temerity to write a note to clients comparing Macquarie to its smaller rival Babcock & Brown. "Of course," says the puckish Le Mesurier, "that just encourages me."
Ferguson and Le Mesurier might like stirring Macquarie, but in the current environment you just can't say a bank has $45 billion repayable in 9 months if it is not true - especially when Macquarie is already suing The Australian for defamation over the Walkley Award winning Beaconsfield gold mine coverage by Michael West.
It is not clear if Le Mesurier was Ferguson's source today, but he was quoted further on in her column about Babcock. It will be very interesting to see how The Australian covers this issue tomorrow.
Let's hope they report that ASIC interviewed Le Mesurier at 3pm this afternoon!
Activist funds
I gave a robust 28-minute presentation to a group of fund managers in Melbourne yesterday and hopefully made the case that the time is nigh for the establishment of some Australian-based activist funds. Lo and behold, we've seen three more activist fund developments over the past 24 hours and, as usual, all of them involve offshore players.
Orbis moves on Centro Retail
The first was the move by global investment manager Orbis to lifts its stake in Centro Retail to 11.86%, making it the largest independent shareholder.
Centro Retail is running one of Australia's most inaccurate balance sheets at the moment, as after more than $1 billion in write-downs it still claims to have net tangible assets of $1.27 per unit. The stock closed at 11.5c tonight, valuing the whole company at $270 million, so clearly the directors have to either realise the value or further write-down the assets.
I'm running for the Centro Retail board at the November 27 AGM on the platform that it needs some directors who are independent of Centro Properties Group. This is a governance no brainer given the "mirror boards" and I'll be making contact with the Orbis Sydney office shortly.
Cape Lambert Iron EGM
The PO Box is bulging at the moment with notices of meeting for the AGM season. The most interesting offering today - apart from a dividend cheque of $4.90 from Babcock & Brown Infrastructure when these clowns should be conserving all cash to service that $9 billion debt - was this notice of meeting for a hostile EGM at Cape Lambert Iron Ore Ltd.
We know that Perth mining plays can be the Wild West, but the Cape Lambert saga is right up there. The wannabe iron-ore producer recently sold its namesake Cape Lambert iron ore prospect to the Chinese government for $400 million and Federal Treasurer Wayne Swan duly gave his approval.
Controversial Russian steelmaker Evras bought a 19.9% stake and threatened to stymie the Chinese sale, but then all went quiet and shareholders approved the sale. The Cape Lambert board was subsequently dismayed when the Chinese did a separate deal with Evras to give it 75% of the project. That would have have raised plenty of eyebrows at the Foreign Investment Review Board, especially given recent events in Georgia, and The Australian's respected columnist Bryan Frith has called for regulatory action.
Meanwhile, a bloke called Mich Shemedian, whose investment vehicle Power United is registered in Brussells and Hong Kong in this substantial shareholder statement, has bought 11% and is now attempting to remove managing director Tony Sage for ploughing some of the Chinese cash into what sounds like a very dodgy African mining play in Sierra Leone.
What makes Dubai-based Shemedian more interesting is that he's also proposing to appoint Melbourne-based muscle car enthusiast and former Opes Prime customer Leo "the Gun" Khouri to the board. You can read about him in The Age.
Kiddies activist comes Down Under
The biggest news today is that The Children's Investment Fund has popped up on the register of Babcock & Brown Wind Partners with a 5.29% stake after shelling out about $50 million for 45 million shares over the past few weeks.
Chris Hohn's $10 billion activist fund is famed for shaking up boards and this is a welcome development, although the troublemaking kiddies are still under water on their investment even after units in BBW soared 17.5c to $1.06 today. Hohn will presumably wants something more dramatic than BBW's 10% on-market buyback which was announced yesterday morning.
Here is the data from one of the slides in yesterday's presentation pointing out that there is money for jam for activists to shake up the numerous third party managed Australian vehicles that are trading way below claimed net tangible assets:
Macquarie Infrastructure Group: NTA $3.84, market price $2.05 - $4 billion of missing value
Macquarie Airports: NTA $4.57, last close $2.58 - $3.5 billion of missing value
Allco Equity Partners: NTA $5.52, $1.02 in cash, last close $1.95 - $351 million of missing value
GPT: NTA $3.68, last close $1.61 - $4.5 billion of missing value
Whilst GPT is different because it is internally managed and has more than $4 billion in debt, there is an option to shake up the board and management which hasn't changed since the share price plunged.
MIG and MAP also have plenty of debt at the asset level, but AEP is a cash box with no debt that is simply being shunned because of its name. Easy pickings for someone to grab 5% and then call a meeting to at first change the name and later internalise the management or return the cash.
Fortescue under the pump
Andrew Forrest's Fortescue Metals isn't looking too flash after plunging 37c to an eight month low of $5.22 today. The market is still awaiting the full years results although ASX spin doctor Matthew Gibbs explained the delay with this email today:
Fortescue has until 30 September to report. Exploration companies are not subject to the two-month reporting deadline. For half-year results they have two-and-a-half months to lodge final reports. For the full-year they have three months, as per the Corps Act, section 319. Fortescue is still classified as an explorer. It may be re-classified after the September quarter if it continues to produce.
The market hates uncertainty at the moment and with all those rumours flying around about Fortescue, you would think an early release of the results would make sense. Forrest surely isn't enjoying seeing his wealth tumble to $5 billion, such that he's now not even Australia's bronze medallist on the Rich List stakes.
That's all for now.
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.