Record week for red ink, Wesfarmers opportunity, Chinalco polling, farm sell-off, CSR baggage, capital raising losses, Babcock insult, Rich List and Packer probity issue
February 2, 2010
Dear Mayne Reporters,
A record 29 ASX-listed companies reported losses of more than $100 million in 2007-08, but the figure might finish up above 50 in 2008-09 as we see unprecedented amounts of red ink flow this week courtesy of the global financial crisis.
And that's before even considering the likes of embattled steel makers Onesteel and Bluescope Steel which have both declared large profits this month despite now trading at huge discounts to book value given the crisis hitting global manufacturing, as The Economist explained in its latest cover story.
Today's $401 million net profit from Bluescope Steel triggered a 10% share plunge given the gloomy outlook statements. This leaves auditor Bruce Meehan from Ernst & Young looking really sillly because he's signed off on accounts showing net assets rose from $3.94 billion in August 2008 to $4.7 billion in the February 2009 balance sheet.
Bluescope is now capitalised at just $2.6 billion, which is $2 billion above the odds after today's decision to take no write-downs.
Three join the $100m loss club today
We did have three companies come clean today with losses exceeding $100 million, but only DUET's $143 million net loss dragged the accounts to a place approximate with the new reality. DUET now claims to have net assets of $1.55 per share and the stock is today trading around $2.15. If only all the other Macquarie managed investment vehicles took a similar approach. Then again, that would require declaring losses of more than $10 billion in 10 days for the Millionaires Factory, which would further undermine its faltering reputation and share price which hit a five year low of $19.57 today.
The new Fairfax Media CEO Brian McCarthy today took a gentle swing at the balance sheet with write-downs of $447.4 million which got him onto our list tracking new CEOs who take an axe to their predecessor's balance sheet. However, McCarthy's announcement only produced a net loss of $365.3 million and only cut the intangibles figure from $6.5 billion to $6 billion. If anyone still thinks either The Age or The SMH is worth more than $1 billion I'll go he.
The new claimed net assets figure of $4.5 billion on the latest Fairfax balance sheet completely dwarfs the market capitalisation of $1.6 billion. Auditor Christopher George from Ernst & Young should have been a lot tougher.
Similarly, today's $114 million net loss from Virgin Blue was, like DUET's, largely driven by hedging and derivative losses. However, whilst claimed net assets plunged from $925.3 million in August 2008 to $604.8 million, it remains well above today's market capitalisation of $250 million. The auditor is Robert Jones from KPMG in Brisbane and he should have pushed for some larger write-downs.
An even bigger test tomorrow with BBW, MacMedia and Suncorp
The closer we get to Friday's reporting dealing, the more red ink we'll see and the more failed write-downs will emerge.
For instance, three of tomorrow's scheduled half year results will come from Babcock & Brown Wind, Macquarie Media and Suncorp. Collectively, they are trading at a discount of almost $9 billion, but what odds at least one of them will actually declare a profit.
Here are their entries on our fascinating list tracking companies trading at big discounts to claimed net assets:
Babcock & Brown Wind Partners: the 2007-08 balance sheet claimed net assets of $1.13 billion so big write-downs are warranted in tomorrow's results given the market capitaliation is down to $770 million. The auditor is Andrew Wilson from PwC.
Macquarie Media: the market capitalisation has tumbled to just $150 million but the 2007-08 financial report claims net assets of $965.8 million, so it will be very interesting to see if auditor Wayne Andrews from PwC has required any write-downs when the half year is released tomorrow morning.
Suncorp: reports tomorrow and should book big write-downs given market capitalisation is down to $5 billion yet the last balance sheet claimed net assets of $12.36 billion. Only Wesfarmers and News Corp are trading at a bigger discount to book value. The auditor is Dr Andries Terblanche from KPMG's Brisbane office.
Confirmed members of the 2008-09 $100m loss club
As we enter the final week of the interim profit reporting season, here are the 23 confirmed new entires on our list tracking all $100 million losses on the ASX over the years.
AXA Asia Pacific: plunged to a net loss of $279 million for calendar 2008 thanks to tumbling investment markets.
Babcock & Brown Japan: despite declaring a loss of $247.6 million for the December 2008 half year, claimed net assets jumped to $859.4 million thanks to the plunging Australian dollar against the yen. The market capitalisation is below $150 million.
CFS Retail: financial and property impairments sent it tumbling to a net loss of $225.7 million for the six months to December 31, 2008.
Challenger Financial Group: reported a $108 million net loss for the six months to December 31, 2008, primarily due to losses on investments.
Challenger Infrastructure Fund: declared a $100 million loss for the December 2008 half but much bigger write-downs were warranted given the market capitalisation is down below $600 million yet the board and auditor Graeme McKenzie from Ernst & Young now claim it has net assets of $924.8 million.
Commonwealth Property Office Fund: took modest write-downs of $203 million and finished with a net loss of $298.6 million for the six months to December 31, 2008.
Dexus Property Group: savage write-downs dragged the property manager to a bottom line loss of $964 million for the half to December 31, 2008.
DUET: the Macquarie managed energy utility delivered a $143 million net loss for the December 2008 half, primarily thanks to derivative and mark to market losses on its financing.
Fairfax Media: new CEO Brian McCarthy took an axe to the balance sheet with write-downs of $447.4 million announced in February 2009, producing a net loss of $365.3 million. However, the claimed net assets of $4.5 billion on the latest balance sheet completely dwarf the market capitalisation of $1.6 billion.
Futuris: Malcolm Jackman came in as the new CEO in September 2008 and managed a net loss of $329 million in the December half after $346 million in write-downs. However, with debt of $1.2 billion and a market capitalisation below $300 million, the write-downs could have been much larger because net assets have only been cut from $1.3 billion to $850 million.
Hutchison Telecommunications: another year, another loss although at $163 million for 2008 but at least it was lower than the previous five years.
ING Office Fund: losses on foreign exchange and derivatives combined with $144 million in property write-downs to produce a $445.7m net loss for the 2008 December half.
Macquarie Communications Infrastructure Group: huge debt loads and financing costs sent this global telco infrastructure manager to a bottom line loss of $1.1 billion for the half to December 31, 2008.
Macquarie DDR: the investor in regional US shopping centres only reported a loss of $220 million for the December half when the market was expecting more than $500 million given the share price.
Macquarie Infrastructure Group: write-downs of assets that had previously been written up resulted in a net loss of $1.2 billion for the six months to December 31, 2008.
Macquarie Office: declared a loss of $1.1 billion in the December 2008 half courtesy of write-downs and derivative exposures.
Mirvac Real Estate Investment Trust: write-downs of almost $200 million sent it tumbling to net loss of $158.1 million for calendar 2008.
Mirvac: suffered a net loss of $645.7 million for the December half of 2008-09 courtesy of big write-downs.
Mirvac Industrial Trust: after a loss of $92 million in the December 2008, the net assets fell to $252 million, which still dwarfs the market capitalisation below $50 million. The auditor is Marcus Laithwaite from PwC.
News Corp: plunged to a $10 billion net loss in the December half after taking $US8.4 billion in write-downs on US TV licences and Dow Jones.
Pacifica Group: following a steep downturn in the automotive sector, this car parts supplier announced a loss of $242 million for the December half.
Stockland: after just over $1 billion in write-downs and impairment charges in 2009, the property giant reported a $726 million loss for the December half.
Virgin Blue: $114 million in losses from ineffective hedging and derivative contracts caused a $101.4 million net loss for the December 2008 half year.
Another 39 $100m-plus losses still to come by end of the week
This is the list that should really shock you because there are no less than 39 companies which have waited until this last week of the reporting season and should join the $100 million loss club. We've included various Allco vehicles which probably won't actually report the loss, but were last claiming to be worth more than $100 million and so technically have lost far more than claimed assets given the apparent insolvency at most of them:
Allco Financial Group: was still claiming to have net assets worth $545 million when it collapsed in November 2008, so the loss for the 2008-09 financial year would clearly have exceeded $600 million.
Asciano: trading at big $1.3 billion discount to claimed net assets of $1.97 billion and will see whether the much-deserved write-downs are booked this Wednesday.
Babcock & Brown: has admitted will be writing down more than $2.4 billion in claimed assets, if we ever see results.
Babcock & Brown Capital: capitalised at about $200 million but claims net assets of $1.28 billion so stand by for the big write-down.
Babcock & Brown Infrastructure: trading at huge discount to claimed net assets of $2.9 billion so expect a massive loss this week.
Babcock & Brown Power: trading at huge discount to claimed net assets of $1.4 billion so expect a massive loss this week.
Babcock & Brown Residential Partners: hasn't traded since November 2008, suggesting that the $146 million in net assets claimed in the 2007-08 annual report has completely disappeared due to the global financial crisis.
Babcock & Brown Wind Partners: the 2007-08 balance sheet claimed net assets of $1.13 billion so big write-downs are warranted in tomorrow's results given the market capitaliation is down to $770 million. The auditor is AJ Wilson from PwC.
Centro Retail: has flagged $700 million in write-downs, but this would still leave it trading at a huge discount to previously claimed net assets of $2.89 billion.
Centro Properties Group: has flagged $980 million in write-downs but this would still leave it trading at a huge discount to claimed net assets of $4.1 billion.
Crown: has flagged $450 million in casino write-downs which should lead to a net loss to be announced this Friday, the latest possible day for its release.
Everest Babcock & Brown: have flagged $186 million goodwill write-down.
FKP: the teetering Brisbane-based property company is now capitalised at barely $100 million when its 2007-08 financial report claimed it had net assets of $1.34 billion. The auditor is Grant Saxon from boutique firm PKF and big write-downs have been foreshadowed. Results due Feb 26.
Goodman Group: foreshadowed losses of more than $1 billion in this statement on February 20 with the full picture coming on February 25.
GPT: has foreshadowed $2.3 billion in write-downs and hedging losses but even then still trading at huge discount to claimed net assets of more than $8 billion. Will get the complete picture with the audited results on February 27, the last Friday of the season.
Gunns: trading at a huge $2 billion discount to claimed net assets of $2.6 billion, so it really is time to start writing down some assets, including the fortune spent so far on the pulp mill.
ING Community Living: trading at huge discount to claimed net assets.
ING Industrial Fund: trading at a discount of more than 90% to last claimed net assets of $2.72 billion.
Lend Lease: has flagged more than $700 million in write-downs and trading at an $800 million discount to latest net assets.
Lend Lease Primelife: despite Lend Lease injecting almost $200 million into the former Babcock & Brown Communities, the stock has plunged to be capitalised at barely $100 million, yet the 2007-08 annual report claimed it was worth $612.8 million. Stand by for big write-downs. The auditor is Gareth Winter from PwC.
MacArthur Cook Property Securities Fund: claims to have net assets of $135 million but the market capitalisation is down to $13 million. The auditor is Andrea Waters from KPMG.
Macquarie Airports: trading at huge $4 billion discount to claimed net assets of $6.2 billion. Result due on February 25.
Macquarie Countrywide: has flagged $600 million in write-downs which won't be nearly enough given market capitalisation is below $400 million yet claimed net assets are still at $3.42 billion.
Macquarie Media: the market capitalisation has tumbled to just $150 million but the 2007-08 financial report claims net assets of $965.8 million, so it will be very interesting to see if auditor Wayne Andrews from PwC has required any write-downs when the half year is released tomorrow morning.
Macquarie Leisure: claims to have net assets of $496 million but the market capitalisation is down to barely $200 million suggesting write-downs are in order.
McArthur Coal: claims to be worth $695 million when market cap is down to $550m. Auditor is Warren Austin from KPMG.
Multiplex Acumen: the property fund investor claimed to have net assets of $285 million in its 2007-08 annual report when the market capitalisation has plunged to just $10 million courtesy of a debt crisis. The auditor is Tanya Gilerman from KPMG.
Multiplex Prime Property Fund: owns stakes in several major Australian office towers but is loaded up with too much debt such that the market capitalisation has plunged to $3 million when the 2007-08 annual report claims net assets of $258 million. The auditor is Tanya Gilerman from KPMG.
Oz Minerals: has flagged write-downs of between $2.3 billion and $2.8 billion, although the mooted MinMetals takeover would suggest write-backs would then be in order.
Paperlinx: after selling its Australian paper manufacturing operations to Nippon Paper for $700 million, admitted this would trigger a $600 million write-down which will send it to be a big loss when the result is released on February 27. However, the 2007-08 annual report claimed net assets of $1.92 billion but that was before an emergency $150 million capital raising which only lifted the market capitalisation to about $450 million. Stand by for a huge loss.
Record Realty: suspended since February 5 but the last balance sheet claimed net assets of $131 million so it should be a big loss if we ever see it.
Rubicon America Trust: foreshadowed a net loss of $320 million in this announcement on January 29 but was suspended on February 5 so we may never see it given the debt crisis. Last claimed to have net assets worth $210 million.
Rubicon Japan Trust: has been suspended since February 5 so we may never see the result but the last published balance sheet claimed net assets of $195 million so the loss should clearly be larger than that.
Rubicon Europe Trust: last traded at a huge discount to claimed net assets of $292 million but has been suspended since November 7 so we'll probably never see the result.
Suncorp: reports tomorrow and should book big write-downs given market capitalisation is down to $5 billion yet the last balance sheet claimed net assets of $12.36 billion. Only Wesfarmers and News Corp are trading at a bigger discount to book value. The auditor is Dr Andries Terblanche from KPMG's Brisbane office.
Transpacific Industries: with claimed net assets of $1.5 billion and a current market capitalisation of just $580 million ahead of an emergency capital raising, we should get huge write-downs if the company even emerges from its suspension to declare its half year results.
Valad Property Group: struggling to stay afloat yet the last annual report claimed net assets of $2.1 billion so stand by for a huge loss this week.
Westfield: flagged $3 billion in write-downs on January 27, but currency movements will still see gross assets rise to over $50 billion when we see the results later this week.
Windimurra Vanadium: we'll never see the result because receivers were appointed in February 2009, but with claimed net assets of $196 in the 2007-08 annual report, the loss for the year would have been north of $200 million. The auditor was KPMG's Brett Fullarton.
Great Wesfarmers opportunity
Read this one carefully folks because it details one of the most lucrative retail arbitrage opportunities I've ever seen through a secondary capital raising - but the window is only open for another two and a half hours and you need to be on BPAY.
Whilst we've all been involved in some pretty attractive floats over the years, the three-for-seven Wesfarmers rights issue which closes at 5pm today should deliver a 20%-plus return in less than 10 days.
The basics of the opportunity are explained in this edition of the Mayne Report that went out on January 30.
Since then, Wesfarmers (code WES) shares have jumped almost $2 to today's lunch time price of $17.60 – meaning the paper profit on the $13.50 offer is about 26%, even if you factor in the 50c interim dividend which does not go to holders of the new shares.
The reason for this is that the market was very impressed with the interim result Wesfarmers released last Monday and the stock has out-performed the market by more than 10% over the past week.
The biggest earner for Wesfarmers is Coles, which basically has a grocery duopoly with Woolworths and people will still have to eat during a global depression.
Whilst Wesfarmers has more debt, it appears the Poms recruited to turn around Coles are making good progress, such that Wesfarmers looks very cheap given its market capitalisation is still only about $12 billion and Woolworths is valued at $33.7 billion.
The whole opportunity swings on the ability of retail shareholders to apply for additional shares over and above their entitlement under the 3-for-7 offer. If Wesfarmers treats retail shareholders as a single class - which they should - then there is 197 million shares costing $2.66 billion on offer and a paper profit of about $750 million to be had.
Of course, there will be a dilution factor once it is announced that a stack more shares were issued than the $400 million predicted in the offer document, but the buffer is sufficiently wide that it really is simply a question of how big the profit is.
I'm more than happy to profit share with subscribers willing to provide finance for additional applications through the BPAY facility, so drop us a line ASAP to stephen@maynereport.com if interested or get your skates on to find another Wesfarmers shareholder willing to be financed into this no-brainer of an opportunity.
Capital raisings under water everywhere
We've put together this comprehensive list looking at capital raisings over the past 18 months and it is fair to say that with the market hitting a new five year low today, the vast majority are well under water. Here are few choice examples:
NAB: $3 billion placement in November 2008 at $20 a share and then a further $250 million raised in a share purchase plan in December 2008 which was priced at $19.97 a share and brought the total raising to $3.25 billion. Stock currently $17.91.
GPT: $1.6 billion raised at 60c through a combination of entitlement offer and placement in October 2008, with the Singapore government emerging as the saviour investing more than $400 million. Stock currently 51.5c.
Incitec Pivot: $902 million raised through a 5-for-13 entitlement offer at $2.50-a-share in late 2008. Stock currently $2.19.
Orica: raised $899 million in August 2008 through a one-for-eight entitlement offer priced at $22.50 a share. Allowed retail shareholders to renounce into a bookbuild but only returned them 10c a share. Shares have since almost halved to $12.75.
Transurban: $659 million share placement at $5.49 a share in June 2008. Stock currently $4.34.
AMP: $559 million raised in late 2008 through a $450 million placement at $5.30-a-share and a subsequent share purchase plan at $5.16 which raised $109 million. Stock currently $4.72.
Macquarie Office: $508 million placement and one-for-one entitlement offer at the knock-down price of 20c in December 2008 in a bid to shore up its balance sheet and improve liquidity. Stock currently 13.5c.
Qantas: $500 million at $1.85 in February 2009 causing shares to tank, but share purchase plan still to come. Stock currently $1.61.
Mirvac: $500 million at 90c a share on November 6, 2008. Stock currently 81c.
Australand: $461 million capital raising at 60c completed in September 2008. Singapore Government stepped up with $300 million as major shareholder through CapitaLand but there wasn't a lot of other support. Stock currently 23.5c.
ConnectEast: $450 million was raised in December 2008 in a one-for-one offer at 55c which saw professional tollroad investor and main underwriter CP2 finish with 27% of the company. Stock currently 41.5c.
ING Office: raised $414 million through a $150 million placement and 1-for-2.9 unit entitlement offer at 80c a share in December 2008, but the stock has since tanked to 25c, capitalising the whole outfit at less than $500 million.
Bluescope Steel: $300 million placement at $3.10 a share in December 2008 and then a further $113 million raised in a follow-on share purchase plan in early 2009 bringing the total to $413 million. Stock currently $2.87.
CSR: $349 million raised in December 2008 through a $125 million placement at $1.40 a share and a one-for-four entitlement offer at the same price. Stock currently $1.13.
Crown: $300 million placement at $4.95-a-share in December 2008 with James Packer stumping up $100 million and share purchase plan to follow. Stock currently $4.69.
Lend Lease: $302 million placement on February 4, 2009 at $6.05 a share to strengthen the balance sheet but the shares then tanked to a 20-year low of $5.27.
Stockland: $300 million placement on October 7, 2008 at $5.30 a share, but then canned the subsequent share purchase plan because there was no alternative VWAP market pricing and the stock tanked to today's woeful level of $2.61.
Dexus Property Group: $300 million placement on December 3, 2008 at 77c a unit and then picked up an additional $11.5 million through the share purchase plan which was attractively priced at 70.67c. However, stock now down to 69.5c.
Paperlinx: $185 million was raised by the world's largest fine paper merchant in October 2008 through a two-for-five entitlement offer priced at $1.25 a share. The stock then tanked to below 40c before recovering to 71c today.
Bendigo & Adelaide Bank: $175 million placement and share purchase plan at $10-a-share in December 2008. Stock currently $7.38.
FKP: the troubled Queensland property player announced a $150 million 5-for-14 entitlement offer at $1.50 in October 2008 but the stock has since tanked to just 37.5c.
Another insult from Babcock & Brown
Babcock & Brown is involved in an interesting battle with Allco and Macquarie to establish which financial engineering house will ultimately end up destroying the most billions of investor dollars.
Whilst Macquarie were clearly far more adept at flicking the risk to their funds whilst gouging enormous fees, Babcock & Brown is showing extraordinary chutzpah as the ship goes down.
Consider this notice of meeting sent to the unlucky sods who stumped up $600 million to buy Babcock & Brown unsecured notes after the 2004 sharemarket listing. In order to vote on the proposal to receive a pathetic 0.1c for each $100 note, investors are being called to a meeting that starts at 4.30pm on Friday, March 13, in Sydney.
Not since the last HIH Insurance AGM at 4.15pm on Friday, December 15, 2000, have we seen a more cynically scheduled investor meeting.
And who is the chair of Babcock & Brown sending covering letters of apology? None other than the greatest destroyer of shareholder value to emerge from Queensland, Elizabeth Nosworthy.
Ms Nosworthy clearly has a hide like a rhinocerous because she still hasn't departed some of her imploding boards. You can see how combative she was with at last year's Babcock & Brown AGM in this video.
Probity issues in the house of Packer
James Packer's Crown has been having some problems getting probity clearance from the Pennsylvania gaming authorities for one of its recent acquisitions, which led to this intriguing ASX announcement today including the following line:
Certain parties associated with Consolidated Press Holdings Limited, a Crown shareholder, are seeking to withdraw from the PGCB licensing process. These parties have not been required to be licensed in other jurisdictions in which Crown holds casino licenses. Discussions between those parties, Crown and the PGCB continue.
Hmmm, just which of the Packer associates doesn't cut the mustard with the Pennsylvania regulators?
Truth be known, James Packer would be much better off if he could get out of the whole deal. Maybe he should start associating with more dodgy characters to give himself a probity escape clause. Then again, no doubt there would have been a best endeavours clause in the contract dealing with regulatory clearance.
The CSR CEO's ACCC baggage
A reader has pointed out that CSR CEO Jerry Maycock was formerly head of Queensland Cement Limited. In 2003, QCL became part of Cement Australia, which the ACCC is currently prosecuting for tying up flyash supplies from Queensland power stations several years ago. Maycock was clearly in charge of QCL and its subsidiary Pozzolanic (also being prosecuted) and seems to have designed the strategy, but being a non-executive Chairman of the board at Cement Australia (from 2003 until 2006) means he might escape prosecution.
Check out the ACCC announcement about proceeding against Pozzolanic from last September.
It doesn't exactly give you confidence in the dominant player in double glazing as the government throws billions at insulating homes.
Selling off the Australian farm - literally
Futuris has today announced it is flogging a 15% stake in the Australian Agricultural Company to interests from the United Arab Emirates. This follows the sale of a separate 20% to Australia's richest lawyer, Allan "the Polish brewer" Myers.
The remainder of the once controlling Futuris stake is being flogged to institutions today.
Combine all this with James Packer's decision to sell his vast pastoral empire for an estimated $425 million to London-based private equity firm and we are literally seeing vast swathes of the Australian farm being sold off to foreign interests by local corporates and billionaires who are burdened with too much debt.
As we've long argued, Australia has been selling the farm to fund our debt-funded life-styles for years and this package of lists tracking various measures of foreign ownership is a unique piece of research that puts names of assets and companies to the broader statistics.
Eddie McGuire's Wizard plug
Who can forget Eddie McGuire's memorable plug for Collingwood's major sponsors McDonald's, Wizard, Adidas and Lexus at the end of the Collingwood AGM in December. Have another listen.
Eddie reckons Wizard was the first to pass on recent cuts in official interest rates whilst the big banks were "skinning" everyone else. Lo and behold, Wizard has announced it won't pass on any of the 100 basis point rate cut announced on February 3.
Check out the broker outrage expressed in this trade magazine.
Investment banker pay, US-style
In case you hadn't yet seen it, check out the New York Attorney-General's submission to Congress this month. It would be nice to ask some senior investment bankers here whether this represents that "international banker income standard" they say their remuneration experts advise them to match, to retain 'key staff'?
Chinalco polling cranks up the pressure on Rudd
Spindoctor's Ross Thornton and Jim Kelly from Third Person sent through the following email to various media last week:
The attached polling report was commissioned by our client, Chinalco. The polling was conducted by the independent polling and issues management consultants, UMR. John Utting of UMR is available to talk to you on the record about the polling, the results, the methodology, whatever you like. In addition to the polling results, the report also provides comparisons to the results of a previous study taken in April. This gives a useful indication of how sentiment has changed since April, as Australian households are increasingly feeling the pinch of the global financial crisis.
In our view, what the poll demonstrates is: Attitudes to Chinese investment in Australia are broadly supportive and support has increased significantly since April, as the GFC has heightened and in the afterglow of the Beijing Olympics. In our view, this poll is proof that the need for greater foreign (and most notably Chinese) investment in Australia is better understood at the community level, than some of the opponents of Chinalco's proposed investment are making out. The investment capital and jobs that could be provided by Chinese investment are recognised as being of importance to the average Australian. There is a significant increase in support for a long term plan for Australia and China to co-ordinate investment in mineral resources (65% in support in Dec 2008, up from 56% in Apr 2008)
We're not sending this to you to get you to write a story about it. However for clarity's sake, it is provided for publication if you choose to do so. Also, we are providing it to every media outlet which is covering this story.
We'd just like you to read it and think about its contents. Also, feel free to call us or Amanda Lee in our office and debate it.
Kind regards,
Ross Thornton and Jim Kelly
Directors
FD Third Person
Another 12 entries on Mayne Report Rich List
The Mayne Report Rich List continues to grow with over 1300 entries. With more additions every week, our rich list is Australia's most comprehensive and a unique research tool for anyone interested in the spread of wealth in Australia - and the destruction of wealth too. Here are the latest 12 new entries:
Alstergren family: the family's estate was established by the late Sir Ian Alstergren who was a Tasmanian salmon farmer and a forest pioneer, which recently auctioned an Edvard Munch painting which sold for US$500,000.
Steve Bowden: a former Newtown rugby league player who has ventured into the hotel business has performed extremely well. He sold the Hurtzville Ritz Hotel in January 2007 at the height of boom of pub values for a then-record $52 million to Melbourne-based Aussie Leisure Group.
Steve Farley: he once part-owned the Cambridge Tavern in Fairfield, NSW, for more than 10 years, but sold out to the Aussie Leisure Group for a reported $45 million.
Fitch family: this Adelaide-based family recently purchased the Golden Grove Village shopping centre in South Australia from the listed CFS Retail Property Trust for a reported $100 million. This sale was largest retail property transaction in Australia for the previous 12 months.
Allen Hamilton: he owns AQUIS staging island in Fiji. They bring in Alpacas from Peru, quarantine them in Fiji and then fly them to Australia. Fiji leases Hamilton the island and he spent $10 million developing the quarantine facilities. He has rural interests all over Australia and lives in a palacial mansion north of Daylesford.
Peter Harburg: a Brisbane-based private investor recently purchased the Brisbane State Law building for close $100 million.
Judd family: from the Glengallen station near Warwick in Queensland, recently purchased 'Ellerby', a Darling Downs property for $3.3 million. They are looking to establish a dairy on the 907 hectare property.
Rodney Price: the former chairman of Fairfax and Brierley Investments recently revealed as the buyer of Australia's most expensive apartment - a three-storey penthouse overlooking Hyde Park in Sydney, for which he paid $20.1 million in December 2008.
Redmond family: this Sydney-based publican family recently purchased the Hurtzville Ritz Hotel for around $40 million which adds to their St Patrick's pub portfolio of three taverns in and around Sydney.
Grant Stuart: with the assistance of Russ Becker, R.A. Becker & Co the importers of B and C grade movies, documentaries and the Bold and the Beautiful, purchased Broadcast Rentals from the liquidators of ISIS - a failed dot com venture. Grant is one of the biggest players in the lucrative broadcast equipment hire business, and he resides in rural Victoria in Hepburn Springs, in a house that he paid $6 million for.
Alla and Allen Woof-Tasker: the owners of the Lake House in the picturesque Victorian town of Daylesford, who purchased the land when it was covered in blackberries. Such a beautiful retreat overlooking the lake is worth plenty.
George Thomas: a Sydney-based publican whose pub, the Meridian Hotel regularly is at or near the top of turnover rankings for pokies in NSW.
The Mayne Report's NEW podcast service
We have created a service for you which over time will collate the best of our video and audio offerings radio, AGMs, speeches and The Mayne Report achive. You can subscribe for free to access this service which includes some funny, insightful, informative and combative grabs. Here you can view or hear some classic stoushes with corporates, politicians, media players and the like. Make a place for it on your ipod or iphone and have a good laugh on the way home. Check it out.
Radio and Manningham Council profile
Have a listen to this February 18 interview on 774 ABC Melbourne with Libby Gore discussing debt crisis and other things financial.
There was also this interview with Mike Smith on 1116 4BC Brisbane discussing the potential of global sovereign defaults.
And finally, check out this brief profile of Councillor Mayne that appeared in the local government Focus newspaper for February.
That's all for this week, but don't forget to get in touch if you fancy getting on board the Wesfarmers arbitrage play before 5pm this afternoon.
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.
A record 29 ASX-listed companies reported losses of more than $100 million in 2007-08, but the figure might finish up above 50 in 2008-09 as we see unprecedented amounts of red ink flow this week courtesy of the global financial crisis.
And that's before even considering the likes of embattled steel makers Onesteel and Bluescope Steel which have both declared large profits this month despite now trading at huge discounts to book value given the crisis hitting global manufacturing, as The Economist explained in its latest cover story.
Today's $401 million net profit from Bluescope Steel triggered a 10% share plunge given the gloomy outlook statements. This leaves auditor Bruce Meehan from Ernst & Young looking really sillly because he's signed off on accounts showing net assets rose from $3.94 billion in August 2008 to $4.7 billion in the February 2009 balance sheet.
Bluescope is now capitalised at just $2.6 billion, which is $2 billion above the odds after today's decision to take no write-downs.
Three join the $100m loss club today
We did have three companies come clean today with losses exceeding $100 million, but only DUET's $143 million net loss dragged the accounts to a place approximate with the new reality. DUET now claims to have net assets of $1.55 per share and the stock is today trading around $2.15. If only all the other Macquarie managed investment vehicles took a similar approach. Then again, that would require declaring losses of more than $10 billion in 10 days for the Millionaires Factory, which would further undermine its faltering reputation and share price which hit a five year low of $19.57 today.
The new Fairfax Media CEO Brian McCarthy today took a gentle swing at the balance sheet with write-downs of $447.4 million which got him onto our list tracking new CEOs who take an axe to their predecessor's balance sheet. However, McCarthy's announcement only produced a net loss of $365.3 million and only cut the intangibles figure from $6.5 billion to $6 billion. If anyone still thinks either The Age or The SMH is worth more than $1 billion I'll go he.
The new claimed net assets figure of $4.5 billion on the latest Fairfax balance sheet completely dwarfs the market capitalisation of $1.6 billion. Auditor Christopher George from Ernst & Young should have been a lot tougher.
Similarly, today's $114 million net loss from Virgin Blue was, like DUET's, largely driven by hedging and derivative losses. However, whilst claimed net assets plunged from $925.3 million in August 2008 to $604.8 million, it remains well above today's market capitalisation of $250 million. The auditor is Robert Jones from KPMG in Brisbane and he should have pushed for some larger write-downs.
An even bigger test tomorrow with BBW, MacMedia and Suncorp
The closer we get to Friday's reporting dealing, the more red ink we'll see and the more failed write-downs will emerge.
For instance, three of tomorrow's scheduled half year results will come from Babcock & Brown Wind, Macquarie Media and Suncorp. Collectively, they are trading at a discount of almost $9 billion, but what odds at least one of them will actually declare a profit.
Here are their entries on our fascinating list tracking companies trading at big discounts to claimed net assets:
Babcock & Brown Wind Partners: the 2007-08 balance sheet claimed net assets of $1.13 billion so big write-downs are warranted in tomorrow's results given the market capitaliation is down to $770 million. The auditor is Andrew Wilson from PwC.
Macquarie Media: the market capitalisation has tumbled to just $150 million but the 2007-08 financial report claims net assets of $965.8 million, so it will be very interesting to see if auditor Wayne Andrews from PwC has required any write-downs when the half year is released tomorrow morning.
Suncorp: reports tomorrow and should book big write-downs given market capitalisation is down to $5 billion yet the last balance sheet claimed net assets of $12.36 billion. Only Wesfarmers and News Corp are trading at a bigger discount to book value. The auditor is Dr Andries Terblanche from KPMG's Brisbane office.
Confirmed members of the 2008-09 $100m loss club
As we enter the final week of the interim profit reporting season, here are the 23 confirmed new entires on our list tracking all $100 million losses on the ASX over the years.
AXA Asia Pacific: plunged to a net loss of $279 million for calendar 2008 thanks to tumbling investment markets.
Babcock & Brown Japan: despite declaring a loss of $247.6 million for the December 2008 half year, claimed net assets jumped to $859.4 million thanks to the plunging Australian dollar against the yen. The market capitalisation is below $150 million.
CFS Retail: financial and property impairments sent it tumbling to a net loss of $225.7 million for the six months to December 31, 2008.
Challenger Financial Group: reported a $108 million net loss for the six months to December 31, 2008, primarily due to losses on investments.
Challenger Infrastructure Fund: declared a $100 million loss for the December 2008 half but much bigger write-downs were warranted given the market capitalisation is down below $600 million yet the board and auditor Graeme McKenzie from Ernst & Young now claim it has net assets of $924.8 million.
Commonwealth Property Office Fund: took modest write-downs of $203 million and finished with a net loss of $298.6 million for the six months to December 31, 2008.
Dexus Property Group: savage write-downs dragged the property manager to a bottom line loss of $964 million for the half to December 31, 2008.
DUET: the Macquarie managed energy utility delivered a $143 million net loss for the December 2008 half, primarily thanks to derivative and mark to market losses on its financing.
Fairfax Media: new CEO Brian McCarthy took an axe to the balance sheet with write-downs of $447.4 million announced in February 2009, producing a net loss of $365.3 million. However, the claimed net assets of $4.5 billion on the latest balance sheet completely dwarf the market capitalisation of $1.6 billion.
Futuris: Malcolm Jackman came in as the new CEO in September 2008 and managed a net loss of $329 million in the December half after $346 million in write-downs. However, with debt of $1.2 billion and a market capitalisation below $300 million, the write-downs could have been much larger because net assets have only been cut from $1.3 billion to $850 million.
Hutchison Telecommunications: another year, another loss although at $163 million for 2008 but at least it was lower than the previous five years.
ING Office Fund: losses on foreign exchange and derivatives combined with $144 million in property write-downs to produce a $445.7m net loss for the 2008 December half.
Macquarie Communications Infrastructure Group: huge debt loads and financing costs sent this global telco infrastructure manager to a bottom line loss of $1.1 billion for the half to December 31, 2008.
Macquarie DDR: the investor in regional US shopping centres only reported a loss of $220 million for the December half when the market was expecting more than $500 million given the share price.
Macquarie Infrastructure Group: write-downs of assets that had previously been written up resulted in a net loss of $1.2 billion for the six months to December 31, 2008.
Macquarie Office: declared a loss of $1.1 billion in the December 2008 half courtesy of write-downs and derivative exposures.
Mirvac Real Estate Investment Trust: write-downs of almost $200 million sent it tumbling to net loss of $158.1 million for calendar 2008.
Mirvac: suffered a net loss of $645.7 million for the December half of 2008-09 courtesy of big write-downs.
Mirvac Industrial Trust: after a loss of $92 million in the December 2008, the net assets fell to $252 million, which still dwarfs the market capitalisation below $50 million. The auditor is Marcus Laithwaite from PwC.
News Corp: plunged to a $10 billion net loss in the December half after taking $US8.4 billion in write-downs on US TV licences and Dow Jones.
Pacifica Group: following a steep downturn in the automotive sector, this car parts supplier announced a loss of $242 million for the December half.
Stockland: after just over $1 billion in write-downs and impairment charges in 2009, the property giant reported a $726 million loss for the December half.
Virgin Blue: $114 million in losses from ineffective hedging and derivative contracts caused a $101.4 million net loss for the December 2008 half year.
Another 39 $100m-plus losses still to come by end of the week
This is the list that should really shock you because there are no less than 39 companies which have waited until this last week of the reporting season and should join the $100 million loss club. We've included various Allco vehicles which probably won't actually report the loss, but were last claiming to be worth more than $100 million and so technically have lost far more than claimed assets given the apparent insolvency at most of them:
Allco Financial Group: was still claiming to have net assets worth $545 million when it collapsed in November 2008, so the loss for the 2008-09 financial year would clearly have exceeded $600 million.
Asciano: trading at big $1.3 billion discount to claimed net assets of $1.97 billion and will see whether the much-deserved write-downs are booked this Wednesday.
Babcock & Brown: has admitted will be writing down more than $2.4 billion in claimed assets, if we ever see results.
Babcock & Brown Capital: capitalised at about $200 million but claims net assets of $1.28 billion so stand by for the big write-down.
Babcock & Brown Infrastructure: trading at huge discount to claimed net assets of $2.9 billion so expect a massive loss this week.
Babcock & Brown Power: trading at huge discount to claimed net assets of $1.4 billion so expect a massive loss this week.
Babcock & Brown Residential Partners: hasn't traded since November 2008, suggesting that the $146 million in net assets claimed in the 2007-08 annual report has completely disappeared due to the global financial crisis.
Babcock & Brown Wind Partners: the 2007-08 balance sheet claimed net assets of $1.13 billion so big write-downs are warranted in tomorrow's results given the market capitaliation is down to $770 million. The auditor is AJ Wilson from PwC.
Centro Retail: has flagged $700 million in write-downs, but this would still leave it trading at a huge discount to previously claimed net assets of $2.89 billion.
Centro Properties Group: has flagged $980 million in write-downs but this would still leave it trading at a huge discount to claimed net assets of $4.1 billion.
Crown: has flagged $450 million in casino write-downs which should lead to a net loss to be announced this Friday, the latest possible day for its release.
Everest Babcock & Brown: have flagged $186 million goodwill write-down.
FKP: the teetering Brisbane-based property company is now capitalised at barely $100 million when its 2007-08 financial report claimed it had net assets of $1.34 billion. The auditor is Grant Saxon from boutique firm PKF and big write-downs have been foreshadowed. Results due Feb 26.
Goodman Group: foreshadowed losses of more than $1 billion in this statement on February 20 with the full picture coming on February 25.
GPT: has foreshadowed $2.3 billion in write-downs and hedging losses but even then still trading at huge discount to claimed net assets of more than $8 billion. Will get the complete picture with the audited results on February 27, the last Friday of the season.
Gunns: trading at a huge $2 billion discount to claimed net assets of $2.6 billion, so it really is time to start writing down some assets, including the fortune spent so far on the pulp mill.
ING Community Living: trading at huge discount to claimed net assets.
ING Industrial Fund: trading at a discount of more than 90% to last claimed net assets of $2.72 billion.
Lend Lease: has flagged more than $700 million in write-downs and trading at an $800 million discount to latest net assets.
Lend Lease Primelife: despite Lend Lease injecting almost $200 million into the former Babcock & Brown Communities, the stock has plunged to be capitalised at barely $100 million, yet the 2007-08 annual report claimed it was worth $612.8 million. Stand by for big write-downs. The auditor is Gareth Winter from PwC.
MacArthur Cook Property Securities Fund: claims to have net assets of $135 million but the market capitalisation is down to $13 million. The auditor is Andrea Waters from KPMG.
Macquarie Airports: trading at huge $4 billion discount to claimed net assets of $6.2 billion. Result due on February 25.
Macquarie Countrywide: has flagged $600 million in write-downs which won't be nearly enough given market capitalisation is below $400 million yet claimed net assets are still at $3.42 billion.
Macquarie Media: the market capitalisation has tumbled to just $150 million but the 2007-08 financial report claims net assets of $965.8 million, so it will be very interesting to see if auditor Wayne Andrews from PwC has required any write-downs when the half year is released tomorrow morning.
Macquarie Leisure: claims to have net assets of $496 million but the market capitalisation is down to barely $200 million suggesting write-downs are in order.
McArthur Coal: claims to be worth $695 million when market cap is down to $550m. Auditor is Warren Austin from KPMG.
Multiplex Acumen: the property fund investor claimed to have net assets of $285 million in its 2007-08 annual report when the market capitalisation has plunged to just $10 million courtesy of a debt crisis. The auditor is Tanya Gilerman from KPMG.
Multiplex Prime Property Fund: owns stakes in several major Australian office towers but is loaded up with too much debt such that the market capitalisation has plunged to $3 million when the 2007-08 annual report claims net assets of $258 million. The auditor is Tanya Gilerman from KPMG.
Oz Minerals: has flagged write-downs of between $2.3 billion and $2.8 billion, although the mooted MinMetals takeover would suggest write-backs would then be in order.
Paperlinx: after selling its Australian paper manufacturing operations to Nippon Paper for $700 million, admitted this would trigger a $600 million write-down which will send it to be a big loss when the result is released on February 27. However, the 2007-08 annual report claimed net assets of $1.92 billion but that was before an emergency $150 million capital raising which only lifted the market capitalisation to about $450 million. Stand by for a huge loss.
Record Realty: suspended since February 5 but the last balance sheet claimed net assets of $131 million so it should be a big loss if we ever see it.
Rubicon America Trust: foreshadowed a net loss of $320 million in this announcement on January 29 but was suspended on February 5 so we may never see it given the debt crisis. Last claimed to have net assets worth $210 million.
Rubicon Japan Trust: has been suspended since February 5 so we may never see the result but the last published balance sheet claimed net assets of $195 million so the loss should clearly be larger than that.
Rubicon Europe Trust: last traded at a huge discount to claimed net assets of $292 million but has been suspended since November 7 so we'll probably never see the result.
Suncorp: reports tomorrow and should book big write-downs given market capitalisation is down to $5 billion yet the last balance sheet claimed net assets of $12.36 billion. Only Wesfarmers and News Corp are trading at a bigger discount to book value. The auditor is Dr Andries Terblanche from KPMG's Brisbane office.
Transpacific Industries: with claimed net assets of $1.5 billion and a current market capitalisation of just $580 million ahead of an emergency capital raising, we should get huge write-downs if the company even emerges from its suspension to declare its half year results.
Valad Property Group: struggling to stay afloat yet the last annual report claimed net assets of $2.1 billion so stand by for a huge loss this week.
Westfield: flagged $3 billion in write-downs on January 27, but currency movements will still see gross assets rise to over $50 billion when we see the results later this week.
Windimurra Vanadium: we'll never see the result because receivers were appointed in February 2009, but with claimed net assets of $196 in the 2007-08 annual report, the loss for the year would have been north of $200 million. The auditor was KPMG's Brett Fullarton.
Great Wesfarmers opportunity
Read this one carefully folks because it details one of the most lucrative retail arbitrage opportunities I've ever seen through a secondary capital raising - but the window is only open for another two and a half hours and you need to be on BPAY.
Whilst we've all been involved in some pretty attractive floats over the years, the three-for-seven Wesfarmers rights issue which closes at 5pm today should deliver a 20%-plus return in less than 10 days.
The basics of the opportunity are explained in this edition of the Mayne Report that went out on January 30.
Since then, Wesfarmers (code WES) shares have jumped almost $2 to today's lunch time price of $17.60 – meaning the paper profit on the $13.50 offer is about 26%, even if you factor in the 50c interim dividend which does not go to holders of the new shares.
The reason for this is that the market was very impressed with the interim result Wesfarmers released last Monday and the stock has out-performed the market by more than 10% over the past week.
The biggest earner for Wesfarmers is Coles, which basically has a grocery duopoly with Woolworths and people will still have to eat during a global depression.
Whilst Wesfarmers has more debt, it appears the Poms recruited to turn around Coles are making good progress, such that Wesfarmers looks very cheap given its market capitalisation is still only about $12 billion and Woolworths is valued at $33.7 billion.
The whole opportunity swings on the ability of retail shareholders to apply for additional shares over and above their entitlement under the 3-for-7 offer. If Wesfarmers treats retail shareholders as a single class - which they should - then there is 197 million shares costing $2.66 billion on offer and a paper profit of about $750 million to be had.
Of course, there will be a dilution factor once it is announced that a stack more shares were issued than the $400 million predicted in the offer document, but the buffer is sufficiently wide that it really is simply a question of how big the profit is.
I'm more than happy to profit share with subscribers willing to provide finance for additional applications through the BPAY facility, so drop us a line ASAP to stephen@maynereport.com if interested or get your skates on to find another Wesfarmers shareholder willing to be financed into this no-brainer of an opportunity.
Capital raisings under water everywhere
We've put together this comprehensive list looking at capital raisings over the past 18 months and it is fair to say that with the market hitting a new five year low today, the vast majority are well under water. Here are few choice examples:
NAB: $3 billion placement in November 2008 at $20 a share and then a further $250 million raised in a share purchase plan in December 2008 which was priced at $19.97 a share and brought the total raising to $3.25 billion. Stock currently $17.91.
GPT: $1.6 billion raised at 60c through a combination of entitlement offer and placement in October 2008, with the Singapore government emerging as the saviour investing more than $400 million. Stock currently 51.5c.
Incitec Pivot: $902 million raised through a 5-for-13 entitlement offer at $2.50-a-share in late 2008. Stock currently $2.19.
Orica: raised $899 million in August 2008 through a one-for-eight entitlement offer priced at $22.50 a share. Allowed retail shareholders to renounce into a bookbuild but only returned them 10c a share. Shares have since almost halved to $12.75.
Transurban: $659 million share placement at $5.49 a share in June 2008. Stock currently $4.34.
AMP: $559 million raised in late 2008 through a $450 million placement at $5.30-a-share and a subsequent share purchase plan at $5.16 which raised $109 million. Stock currently $4.72.
Macquarie Office: $508 million placement and one-for-one entitlement offer at the knock-down price of 20c in December 2008 in a bid to shore up its balance sheet and improve liquidity. Stock currently 13.5c.
Qantas: $500 million at $1.85 in February 2009 causing shares to tank, but share purchase plan still to come. Stock currently $1.61.
Mirvac: $500 million at 90c a share on November 6, 2008. Stock currently 81c.
Australand: $461 million capital raising at 60c completed in September 2008. Singapore Government stepped up with $300 million as major shareholder through CapitaLand but there wasn't a lot of other support. Stock currently 23.5c.
ConnectEast: $450 million was raised in December 2008 in a one-for-one offer at 55c which saw professional tollroad investor and main underwriter CP2 finish with 27% of the company. Stock currently 41.5c.
ING Office: raised $414 million through a $150 million placement and 1-for-2.9 unit entitlement offer at 80c a share in December 2008, but the stock has since tanked to 25c, capitalising the whole outfit at less than $500 million.
Bluescope Steel: $300 million placement at $3.10 a share in December 2008 and then a further $113 million raised in a follow-on share purchase plan in early 2009 bringing the total to $413 million. Stock currently $2.87.
CSR: $349 million raised in December 2008 through a $125 million placement at $1.40 a share and a one-for-four entitlement offer at the same price. Stock currently $1.13.
Crown: $300 million placement at $4.95-a-share in December 2008 with James Packer stumping up $100 million and share purchase plan to follow. Stock currently $4.69.
Lend Lease: $302 million placement on February 4, 2009 at $6.05 a share to strengthen the balance sheet but the shares then tanked to a 20-year low of $5.27.
Stockland: $300 million placement on October 7, 2008 at $5.30 a share, but then canned the subsequent share purchase plan because there was no alternative VWAP market pricing and the stock tanked to today's woeful level of $2.61.
Dexus Property Group: $300 million placement on December 3, 2008 at 77c a unit and then picked up an additional $11.5 million through the share purchase plan which was attractively priced at 70.67c. However, stock now down to 69.5c.
Paperlinx: $185 million was raised by the world's largest fine paper merchant in October 2008 through a two-for-five entitlement offer priced at $1.25 a share. The stock then tanked to below 40c before recovering to 71c today.
Bendigo & Adelaide Bank: $175 million placement and share purchase plan at $10-a-share in December 2008. Stock currently $7.38.
FKP: the troubled Queensland property player announced a $150 million 5-for-14 entitlement offer at $1.50 in October 2008 but the stock has since tanked to just 37.5c.
Another insult from Babcock & Brown
Babcock & Brown is involved in an interesting battle with Allco and Macquarie to establish which financial engineering house will ultimately end up destroying the most billions of investor dollars.
Whilst Macquarie were clearly far more adept at flicking the risk to their funds whilst gouging enormous fees, Babcock & Brown is showing extraordinary chutzpah as the ship goes down.
Consider this notice of meeting sent to the unlucky sods who stumped up $600 million to buy Babcock & Brown unsecured notes after the 2004 sharemarket listing. In order to vote on the proposal to receive a pathetic 0.1c for each $100 note, investors are being called to a meeting that starts at 4.30pm on Friday, March 13, in Sydney.
Not since the last HIH Insurance AGM at 4.15pm on Friday, December 15, 2000, have we seen a more cynically scheduled investor meeting.
And who is the chair of Babcock & Brown sending covering letters of apology? None other than the greatest destroyer of shareholder value to emerge from Queensland, Elizabeth Nosworthy.
Ms Nosworthy clearly has a hide like a rhinocerous because she still hasn't departed some of her imploding boards. You can see how combative she was with at last year's Babcock & Brown AGM in this video.
Probity issues in the house of Packer
James Packer's Crown has been having some problems getting probity clearance from the Pennsylvania gaming authorities for one of its recent acquisitions, which led to this intriguing ASX announcement today including the following line:
Certain parties associated with Consolidated Press Holdings Limited, a Crown shareholder, are seeking to withdraw from the PGCB licensing process. These parties have not been required to be licensed in other jurisdictions in which Crown holds casino licenses. Discussions between those parties, Crown and the PGCB continue.
Hmmm, just which of the Packer associates doesn't cut the mustard with the Pennsylvania regulators?
Truth be known, James Packer would be much better off if he could get out of the whole deal. Maybe he should start associating with more dodgy characters to give himself a probity escape clause. Then again, no doubt there would have been a best endeavours clause in the contract dealing with regulatory clearance.
The CSR CEO's ACCC baggage
A reader has pointed out that CSR CEO Jerry Maycock was formerly head of Queensland Cement Limited. In 2003, QCL became part of Cement Australia, which the ACCC is currently prosecuting for tying up flyash supplies from Queensland power stations several years ago. Maycock was clearly in charge of QCL and its subsidiary Pozzolanic (also being prosecuted) and seems to have designed the strategy, but being a non-executive Chairman of the board at Cement Australia (from 2003 until 2006) means he might escape prosecution.
Check out the ACCC announcement about proceeding against Pozzolanic from last September.
It doesn't exactly give you confidence in the dominant player in double glazing as the government throws billions at insulating homes.
Selling off the Australian farm - literally
Futuris has today announced it is flogging a 15% stake in the Australian Agricultural Company to interests from the United Arab Emirates. This follows the sale of a separate 20% to Australia's richest lawyer, Allan "the Polish brewer" Myers.
The remainder of the once controlling Futuris stake is being flogged to institutions today.
Combine all this with James Packer's decision to sell his vast pastoral empire for an estimated $425 million to London-based private equity firm and we are literally seeing vast swathes of the Australian farm being sold off to foreign interests by local corporates and billionaires who are burdened with too much debt.
As we've long argued, Australia has been selling the farm to fund our debt-funded life-styles for years and this package of lists tracking various measures of foreign ownership is a unique piece of research that puts names of assets and companies to the broader statistics.
Eddie McGuire's Wizard plug
Who can forget Eddie McGuire's memorable plug for Collingwood's major sponsors McDonald's, Wizard, Adidas and Lexus at the end of the Collingwood AGM in December. Have another listen.
Eddie reckons Wizard was the first to pass on recent cuts in official interest rates whilst the big banks were "skinning" everyone else. Lo and behold, Wizard has announced it won't pass on any of the 100 basis point rate cut announced on February 3.
Check out the broker outrage expressed in this trade magazine.
Investment banker pay, US-style
In case you hadn't yet seen it, check out the New York Attorney-General's submission to Congress this month. It would be nice to ask some senior investment bankers here whether this represents that "international banker income standard" they say their remuneration experts advise them to match, to retain 'key staff'?
Chinalco polling cranks up the pressure on Rudd
Spindoctor's Ross Thornton and Jim Kelly from Third Person sent through the following email to various media last week:
The attached polling report was commissioned by our client, Chinalco. The polling was conducted by the independent polling and issues management consultants, UMR. John Utting of UMR is available to talk to you on the record about the polling, the results, the methodology, whatever you like. In addition to the polling results, the report also provides comparisons to the results of a previous study taken in April. This gives a useful indication of how sentiment has changed since April, as Australian households are increasingly feeling the pinch of the global financial crisis.
In our view, what the poll demonstrates is: Attitudes to Chinese investment in Australia are broadly supportive and support has increased significantly since April, as the GFC has heightened and in the afterglow of the Beijing Olympics. In our view, this poll is proof that the need for greater foreign (and most notably Chinese) investment in Australia is better understood at the community level, than some of the opponents of Chinalco's proposed investment are making out. The investment capital and jobs that could be provided by Chinese investment are recognised as being of importance to the average Australian. There is a significant increase in support for a long term plan for Australia and China to co-ordinate investment in mineral resources (65% in support in Dec 2008, up from 56% in Apr 2008)
We're not sending this to you to get you to write a story about it. However for clarity's sake, it is provided for publication if you choose to do so. Also, we are providing it to every media outlet which is covering this story.
We'd just like you to read it and think about its contents. Also, feel free to call us or Amanda Lee in our office and debate it.
Kind regards,
Ross Thornton and Jim Kelly
Directors
FD Third Person
Another 12 entries on Mayne Report Rich List
The Mayne Report Rich List continues to grow with over 1300 entries. With more additions every week, our rich list is Australia's most comprehensive and a unique research tool for anyone interested in the spread of wealth in Australia - and the destruction of wealth too. Here are the latest 12 new entries:
Alstergren family: the family's estate was established by the late Sir Ian Alstergren who was a Tasmanian salmon farmer and a forest pioneer, which recently auctioned an Edvard Munch painting which sold for US$500,000.
Steve Bowden: a former Newtown rugby league player who has ventured into the hotel business has performed extremely well. He sold the Hurtzville Ritz Hotel in January 2007 at the height of boom of pub values for a then-record $52 million to Melbourne-based Aussie Leisure Group.
Steve Farley: he once part-owned the Cambridge Tavern in Fairfield, NSW, for more than 10 years, but sold out to the Aussie Leisure Group for a reported $45 million.
Fitch family: this Adelaide-based family recently purchased the Golden Grove Village shopping centre in South Australia from the listed CFS Retail Property Trust for a reported $100 million. This sale was largest retail property transaction in Australia for the previous 12 months.
Allen Hamilton: he owns AQUIS staging island in Fiji. They bring in Alpacas from Peru, quarantine them in Fiji and then fly them to Australia. Fiji leases Hamilton the island and he spent $10 million developing the quarantine facilities. He has rural interests all over Australia and lives in a palacial mansion north of Daylesford.
Peter Harburg: a Brisbane-based private investor recently purchased the Brisbane State Law building for close $100 million.
Judd family: from the Glengallen station near Warwick in Queensland, recently purchased 'Ellerby', a Darling Downs property for $3.3 million. They are looking to establish a dairy on the 907 hectare property.
Rodney Price: the former chairman of Fairfax and Brierley Investments recently revealed as the buyer of Australia's most expensive apartment - a three-storey penthouse overlooking Hyde Park in Sydney, for which he paid $20.1 million in December 2008.
Redmond family: this Sydney-based publican family recently purchased the Hurtzville Ritz Hotel for around $40 million which adds to their St Patrick's pub portfolio of three taverns in and around Sydney.
Grant Stuart: with the assistance of Russ Becker, R.A. Becker & Co the importers of B and C grade movies, documentaries and the Bold and the Beautiful, purchased Broadcast Rentals from the liquidators of ISIS - a failed dot com venture. Grant is one of the biggest players in the lucrative broadcast equipment hire business, and he resides in rural Victoria in Hepburn Springs, in a house that he paid $6 million for.
Alla and Allen Woof-Tasker: the owners of the Lake House in the picturesque Victorian town of Daylesford, who purchased the land when it was covered in blackberries. Such a beautiful retreat overlooking the lake is worth plenty.
George Thomas: a Sydney-based publican whose pub, the Meridian Hotel regularly is at or near the top of turnover rankings for pokies in NSW.
The Mayne Report's NEW podcast service
We have created a service for you which over time will collate the best of our video and audio offerings radio, AGMs, speeches and The Mayne Report achive. You can subscribe for free to access this service which includes some funny, insightful, informative and combative grabs. Here you can view or hear some classic stoushes with corporates, politicians, media players and the like. Make a place for it on your ipod or iphone and have a good laugh on the way home. Check it out.
Radio and Manningham Council profile
Have a listen to this February 18 interview on 774 ABC Melbourne with Libby Gore discussing debt crisis and other things financial.
There was also this interview with Mike Smith on 1116 4BC Brisbane discussing the potential of global sovereign defaults.
And finally, check out this brief profile of Councillor Mayne that appeared in the local government Focus newspaper for February.
That's all for this week, but don't forget to get in touch if you fancy getting on board the Wesfarmers arbitrage play before 5pm this afternoon.
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.