Top 100 women directors, Transurban, pokies, Axa AGM, Wallace EGM, Graham Bradley, Rich List and more
May 26, 2010
Dear Readers,
Greetings for the first time since our last email edition on May 11 and we hope that you'll enjoy the broad range of content on offer, spanning women on boards, the AGM season, this week's MAP board tilt, pokies, local government, the Rich List and plenty of other lively material.
Do ya best, Stephen Mayne
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Ranking the top 100 women on boards
This list ranking the top Australian female directors has been viewed more than 2000 times in 2010 and we put another three hours into it over the weekend expanding it from a top 75 to top 100, fixing up links, correcting errors and re-jigging the rankings.
For instance, CSL chair Elizabeth Alexander has been dropped from two to five due to reports of two incidents: she has been heard to argue that institutional investors shouldn't even have the vote and as AICD President she apparently argued against the need for a comprehensive code of ethics.
That said, I still really admired Elizabeth when Boral won Ethical Investor Magazine's 2007 corporate governance award and it was explained that as audit committee chair the whistleblower calls went direct to her and 50 employees got the punt that year for breaches of company policy.
Pushing the issue of gender diversity on boards has become a top priority over the past six months as you can see from this package of audio exchanges from the David Jones, Seek, OZ Minerals, Adelaide Brighton, NAB and AXA AGMs. I'll be attending the Melbourne IT AGM at 11am this morning where Lucy Turnbull is the only female director.
There was also this piece for Crikey last week naming the largely old blokes who should be retiring. We've expanded this into a separate list on The Mayne Report and would again welcome your suggestions.
I also attended a dinner in Melbourne last week with plenty of male and female directors which explicitly tackled the issue of how women build their board portfolio.
At a meeting the previous week with a woman who features in the top half or our top 100 list, she made the claim that no woman she knows has a full portfolio of board commitments. Reading through the list, I would argue that most of those in the top 10 have full workloads and the likes of Linda Nicholls, Catherine Livingstone and Caroline Hewson are arguably doing too much.
Finally, we've sent this edition to some of the top female executives and directors in the country in the hope they'll assist with the crowd-sourced rankings and provide further input.
And when sending in confidential feedback, we'd love you to participate in a project I've just commenced of asking top directors to name the board colleagues they most admire and why? Here's three examples of positive feedback about female directors:
Margaret Jackson: far more commercial than other top females around.
Caroline Hewson: very thorough, has always digested the board papers and makes good contributions.
Catherine Livingstone: very thorough, diligent, calm and thoughtful.
The campaign to purge blokey Transurban of its chairman
The AFR is a hard newspaper to follow sometimes. Reporter Jennifer Wiggins requested some background information last week for a piece in Saturday's paper about embattled Transurban chairman David Ryan who, since the departure of Susan Oliver, has led an all-male board.
Having led the charge against Ryan at the last two Transurban AGMs, I was happy to help out The AFR on the telephone and through email.
Indeed, this edition of The Mayne Report was even delayed so the paper could report first that there would be a shareholder resolution seeking the removal of Mr Ryan at this year's AGM if he doesn't resign first.
Lo and behold, the story ran on Saturday about Ryan being under increasing pressure, but there was no mention of the promised shareholder resolution. I've subsequently sent a letter for publication spelling out this plan but is still hasn't been published.
Even if The AFR can't bring itself to report this coming move, surely Transurban chairman David Ryan won't be there by Christmas. It was remarkable that he survived the scandal of being in the chair of ABC Learning when it collapsed in 2008.
The bloke clearly needs the $420,000 a year he pockets from Transurban after being margin called out of his 249,106 ABC Learning shares at the price of $1.895 each in February 2008. Check out the only margin call statement ever lodged by a top 50 chairman.
Fast forward two years and the Transurban board has summarily rejected a $5.42 a share takeover offer from Peter Doherty's CP2, plus two Canadian government pension funds.
The funds explained that they would rather have exposure to unlisted tollroad assets, but Ryan's board got greedy and rebuffed them.
The Ontario Teachers Pension Plan responded by dumping their 12% stake at an estimated $4.44 each last week and the stock has since fallen further to $4.38 - almost 20% below the mooted offer price. That's more than $1 billion we're talking about here.
I have absolutely no confidence in David Ryan's leadership and can't believe he continues to be paid more than $1000 a day by Transurban shareholders after he received an unprecedented 34% against vote at the 2008 AGM.
If the Transurban board don't wake up to reality and move on Ryan, then there will be a resolution that he be sacked at the next AGM in October.
Peter Doherty made some very interesting statements to Alan Kohler on Inside Business two weeks ago. In essence he accused the board of failing to pursue an agreed course of dialogue and acting to save their own jobs rather than maximise value for all shareholders.
The counter-argument is that the three suitors spat the dummy when Transurban paid $600 million to pick up the Lane Cove Tunnel, which the board chose to fund through a rights issue at $4.60 which is now under-water.
Finally, here's a package of interesting links related to Transurban:
Audio from 2009 Transurban AGM over Ryan's ABC Learning baggage
The written account of 2008 Transurban AGM
Businessday article after last year's Transuban AGM
Mayne Report edition on departure of previous Transurban chair, the conflicted Laurie Cox
Political censorship on the ASX and tomorrow's Rio Tinto AGM
Gary Morgan caused quite a stir with his attacks on the ASX for censoring his criticisms of the resources super tax and it was again picked up last week by Terry McCrann in the Herald Sun and Ian McIlwraith in The Age after BHP was allowed to get away with similar "political" statements.
Here are some of the relevent links:
ASX must focus on the message, not the mouthpiece
Terry McCrann, HeraldSun, May 18, 2010
ASX slammed for tax comment 'censorship'
Barry Fitzgerald, BusinessDay.com.au, May 12, 2010
Gary Morgan, Haoma Chairman Lashes Out at ASX Censorship
John Elliott, The John Elliot Report, May 13, 2010
Gary's uncensored address can be viewed on Haoma's website www.haoma.com.au. It will be very interesting to watch how hard the Rio Tinto heavies go at tomorrow's AGM in Melbourne. There will be be numerous issues to go through, some of which were canvassed in this Crikey story about political donations yesterday.
Audio highlights from AXA AGM
The AXA Asia Pacific Holdings AGM in Melbourne on May 18 was remarkable for the fact that I was the only shareholder who raised the $14 billion takeover battle currently being waged by AMP, NAB and the controlling French parent, with the ACCC acting as umpire.
The media picked up on a couple of the issues from the AGM as you see from this piece on NineMSN which included the following:
While AXA APH's board still endorses NAB's tilt, when asked by shareholder activist Stephen Mayne if Tuesday's annual meeting would be the company's last, Mr Allert replied: "Who knows Stephen? Who knows?"
Mr Allert was re-elected as AXA APH's chairman, with Mr Mayne applauding his track record of selling Coles Myer to Wesfarmers, and Southcorp to Foster's, at a high price.
"I think Mr Allert has an excellent record of persuading major companies to pay too much," Mr Mayne said.
"I hope you can complete the trifecta and complete a deal in which AMP, NAB and the French parent will pay a very full price to reward shareholders."
Here are the full edited audio highlights complete with summaries of their relevence underneath:
What have you done about pathetic SPP take up?
Went to the heart of the issue of shareholder apathy raised in this businessday article last year.
Is this our last AGM? How are you handling Paris and how much have we spent on takeover process?
Extracted the useful fact that advisory fees for the takeover had hit $7 million by the end of 2009.
What is the success fee formula for Macquarie? Is there a greater focus on internal audit post GFC? Provide examples of active corporate governance voting
This was the second AGM after GPT the previous week where internal audit was raised, something the profession is keen to happen in a post-GFC world where governance is more important than ever.
Strongly supporting the re-election of chairman Rick Allert
Whilst Allert wasn't orginally in our top 100 male directors list due to the Coles and Southcorp records, two of his fellow directors have now privately named him as the best director they've worked with so the endorsement was thoroughly deserved.
You need more women on your board and what is Paul Sampson's level of contact with Paris?
The only female AXA director is former McKinsey consultant Patricia Akopiantz who comes in at number 25 on our list of top female directors and followed Rick Allert from the Coles board to Axa. It is clearly too late to add a second female now but this will hopefully happen if Axa remains independently listed. Interestingly, Patty Akopiantz joined the Coles board after then CEO John Fletcher declared he wanted "someone I've never heard of before". If the director gene pool is ever going to be seriously deepened and diversified, we need more people with an attitude like that.
The director shareholdings are too low and explain payout scenarios for CEO and directors in takeover deals
Too often takeovers are approved when there are promises of extra payments or sinecures to the directors and senior management. With NAB offering Axa no board seats and no guarantee of a job for its strongly performing CEO Andy Penn, this only appears relevent if AMP comes back to the table given it offered two board seats.
You can see all the action from last year's AXA AGM plus plenty of other interesting material from this member edition sent 12 months ago.
Click the link below to get the latest radio and AGM audio:
Getting stuck into the blokey OZ Minerals board
OZ Minerals is one of many listed companies with no female directors and its AGM in Adelaide last Wednesday was a lively affair as was explained in this piece for Crikey on Thursday.
The board was slammed on several issues and the edited audio highlights were as follows:
How have you managed the currency risk?
They seem to have managed an average US80c conversion after getting $US1.354 billion for all its assets excluding Prominent Hill from the Chinese Government last year.
Will you accept you made mistakes selling off our assets?
The new chairman Neil Hamilton didn't seem well across his brief but did accept shareholders would "probably" be better off today without the MinMetals deal.
I am worried about your class action liability.
IMF and Maurice Blackburn, the class action lawyers suing the company over its poor disclosure, would have loved this spray.
Where does Neil live? Voting in support of chairman
Hmmm, here we have a chairman with residences in Perth and Sydney, leading a Melbourne-based company with one asset, located in the South Australian desert. I made the point that out of town chairs are not desirable but we shall see how this pans out.
Voting against the re-election of Brian Jamieson.
Brian has been an Oxiana director since 2004 and was confirmed as the new chairman of Sigma Pharmaceutical the day after being re-elected at the OZ Minerals AGM. Chairman Hamilton confirmed that Brian's extra responsibilities had been discussed by the board that morning but they all stuck by him. This position should be reconsidered as Brian is over-committed and his performance at Oz Minerals warrants a resignation.
Voting against the remuneration report.
A strongly worded reminder of the scandal that was Owen Hegarty's $8.35 million payout and how this crippled the company's ability to raise equity in its hour of need.
Activism comes to Wallace Absolute Return debacle
The Wallace Absolute Return fund has been an absolute dog so it was good to see one of the largest shareholders called an EGM in Sydney for last Monday and attempted to install two new directors.
The SMH has given the story a good run as you can see from this package but it was disappointing the challengers came up about 3% short.
Activist fund manager Gabriel Radzyminski, one of the two proposed new directors, flagged afterwards that he was concerned with the integrity of the voting outcome.
As you can see from this package of audio highlights, I asked several questions at the EGM and also hopped into the voting system in Australia which provides for no electronic audit trail.
The Cornwall collection
Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing to The Mayne Report since March 2009. Here is a collection of his best cartoons and there are now also some amusing animations.
How Australia's biggest listed investment company tricked some shareholders
AFIC is the nation's biggest listed investment company and normally a pillar of conservative prudence chaired by long-time JB Were supremo Bruce Teele.
Therefore, it came as quite a surprise to read this letter the board was sent by a shareholder about its current share purchase plan:
I am writing to complain about the unfair terms of the current Share Purchase Plan (SPP). The SPP which is priced at the lower of $ 4.90 or a 2.5% discount from the VWAP in the five business days leading up to its closure on 26 May 2010, does not currently represent any discount at all. In fact, after allowing for the final dividend (which was 13c fully franked last year and SPP buyers will NOT receive this year), you are actually selling shares at a premium. If you are serious about promoting the SPP you will use a different pricing mechanism. It is hardly fair to price a share issue at a cum dividend price when the relevant shares are being issued on a ex dividend basis. This will eliminate any so called "discount" unless your share price increases materially over the next few weeks.
The bottom line is why don't you use an ex dividend pricing mechanism or lower the $ 4.90 price to encourage participation? I am also concerned that shareholders may participate without realising that they will not receive the final dividend, which is not payable for quite a few months (and would normally be payable in circumstances where the SPP is conducted well before the end of the relevant year and the ex dividend date).
I would have blindly transferred the $15,000 through by now if it wasn't for this letter alerting me to the trap. With the stock closing at a miserable $4.65 on Friday, it will be interesting to see how many people get suckered into it. We'll be definitely raising this issue at the October AGM.
Google Android, Apple apps and publishers
By Shane Marden, our multi-media manager
Alan Kohler wrote this interesting piece for Business Spectator on May 13 about the impending war between Google Android's free operating system for mobile devices, and Apple's applications for the iphone and ipad. Similar to the battle from the past between Microsoft and Apple, it will be interesting to see who wins out - Google, Apple or the consumer.
Apple have always been a "closed" system which has been one their biggest advantages, but has also held them back in the past. Apple have always designed the hardware but also the software. This has meant that security against viruses and the like has always been greater because the PC can have literally thousands of companies having input into software or creating their own.
With this sort of dilution, there are always going to be technical problems, but the advantages are far cheaper computers and software for the consumer, and being an open platform, there are literally millions of options for the user to implement - software and applications. People are on the move.
Consumer behavior is trending towards having the full computer experience via some kind of mobile device. Blackberry still lead the charge with a 36% market share, but recently Google Android mobile device has taken over the iphone in the US. What does this mean for the publisher and the consumer?
While the war rages, there will be many benefits for the consumer. Devices will become better. Software will get better. The user experience will be more exciting, seamless, organised and hopefully less frustrating.
What does it mean for the online publisher?
Well at the moment, whilst the market sorts itself out, it is prudent, and still relatively expensive, for the publisher to cover all bets. Making sure their web home is compatible with non-Apple devices, but also spending the money creating Apps for Apple devices.
Why do both?
Well, eventually I believe it will be a matter of different strokes for different folks. Similar to the Apple vs Microsoft battle, these days there is a place for both. Depending on what outcomes the publisher and the consumer want, will determine the choices they make. Apple have the sexiest devices, their applications are currently far richer and easier to use, but more expensive. Google Android is more popular, cheaper, and will eventually offer a far more richer experience.
People are on connected and on the move, so publishers, get moving!
Firing up our Youtube channel again
When The Mayne Report first launched in 2007 we were posting daily videos on Youtube. Alas, the cost and time of in-house video production, plus the lack of any revenue, made this model unviable. Besides, daily videos wasn't necessarily the best way to campaign for better corporate governance through shareholder activism.
In the end, it made more sense to channel our efforts into appearing on other people's videos, such as these two recent appearance on Ten's The 7pm Project, rather than trying to build an audience from scratch.
However, when you look back at all the video we've got spanning our own productions, one-off interviews, profiles or lenthy interviews such as Nine's Sunday program or ABC TV's Talking Heads, the monthly spot on Sky's Business View and webcasts of AGMs, it turns out we've got a rather large library of material.
Cross-posting has become much easier now, so we have relaunched our youtube channel and hope you enjoy our many playlists of material. If you have the right app, you can view the videos on the go using any mobile device - free and easy, so subscribe today!
Gindalbie shows how to raise capital without enriching investment banks
Perth-based Gindalbie Metals showed the way with a capital raising earlier this month that wasn't under-written.
Lo and behold, the board even opted for a market driven tool for price discovery, namely a bookbuild to determine how much institutional investors would pay for a non-under-written share placement.
As events turned out, the discount proved pretty steep which probably reflected the environment of a falling market and all the uncertainty over the proposed new resources tax.
However, what we really liked about the offer structure was the way the Chinese Government, which owns a cornerstone 36% stake through Ansteel, agreed to pay the same price as the institutions and bought enough shares to retain its relative position.
So when the instos coughed up $112 million at 93c, Ansteel agreed to spend $63 million at 93c and will top that up once we see how the coming $20 million share purchase plan at 93c for retail investors fares.
Rather than paying an estimated $2 billion to the global investment banking cartel for underwriting services that carried sod all risk, often for just a day or two, more companies should have followed the Gindalbie lead.
After all, when Macquarie did a $500 million placement last year, it wasn't under-written. Doesn't that tell everyone under-writing gouges were something the smartest people in the room tended to avoid.
What blokey Adelaide Brighton could have learnt from blokey Gindalbie
The contrast between Gindablie's effort and the raising from Adelaide Brighton 12 months ago was stark indeed. Despite our opportunistic $2500 profit from Adelaide Brighton, the poor structuring of its offer contributed to our decision to fly to Adelaide for the 2010 AGM last Wednesday.
The board was given a rocket for paying Credit Suisse an estimated $1 million under-writing fee for literally taking on 24 hours of market risk on a $75 million placement which was already at a hefty discount to the market price.
We also gave the all-male board both barrels for leaving the door open on its subsequent SPP, allowing literally thousands of opportunists (including a couple of my associates) to profit at the expense of loyal shareholders who found themselves scaled back from $10,000 worth of shares at $1.78 to just $5000.
The board did not really try and defend themselves as you can hear in this audio file of the exchanges.
Meanwhile, here are the other edited audio highlights from the first Adelaide Brighton AGM in recent memory where shareholders actually put the directors through their paces on a range of issues:
Could you tell us about the Boral exit, and what is the relationship with them now?
Why did Mr Barrow requisition an EGM to appoint James Mackenzie to the board?
In this board renewal I hope they adopt a fresher approach.
Here's hoping the new chairman can find a female director
Have the directors received a pay rise so far in 2010? What is the new chairman's fee?
If the CEO is terminated does he still get the full 1.8 million free shares?
What proportion of the 1600 staff own shares in the company?
Blokey Bradken joins the SPP shame file
For retail investors, there is nothing worse than a company doing a discounted institutional placement with the big end of town and then not following through with a share purchase plan for retail investors.
Whilst it is always fairer to raise capital on a pro rata basis, companies like the speed and lower cost of placements but are increasingly looking after retail when this happens.
However, there are always a few exceptions to the rule and we've been listing them on our SPP shame file list dating back to 2007.
Bradken, which is chaired by former NSW Premier Nick Greiner, is the latest offender after it announced a $50 million institutional placement offer to fund the acquisition of Canada's Almac Machine Works, without any offer for retail shareholders.
Here is the text of an email the company was sent by one angry shareholder:
As a small shareholder who plans to be a long term investor, I feel angry that my shareholding is going to be diluted by the forthcoming institutional placement. The fact that you announce the placement on the same day as a profit upgrade and the announcement of the Canadian purchase stinks. Because the market hasn't had time to react to the
upgrade or the purchase, no-one is in a position to know whether the terms of the placement are fair or very cheap.
As some-one who saw massive dilution on some shareholdings over the last two years at ridiculous prices, without any opportunity to participate, I feel that I, along with all other shareholders, am being denied the opportunity to invest on equal terms into your enlarged company.
During the GFC I participated in a number of capital raisings. Unlike most institutions, I have retained almost all the shares I purchased during that period. I am sure that most institutions churned theirs almost immediately. The effect of that is to dilute the loyal shareholder base and give the institutions a quick profit at the retail shareholders' expense.
Could you please detail the additional costs, if any, involved in making the capital raising available to all shareholders. Could you also give any other reasons why you chose the institutional raising.
Yours faithfully, Robert
Asciano to score another entry on our $100m loss club
A then record 29 ASX-listed companies reported losses of more than $100 million in 2007-08. The GFC saw this soar to another record of 52 companies in 2008-09. That's a pretty amazing statistic given that we had previously only found 75 companies that have achieved that milestone more than 150 times over the past 20 years. Check out where they rank in this league ladder of corporate disasters, plus this chronological version.
Meanwhile, Asciano is about to join the club again after the three new directors, including new chairman Malcolm Broomhead, appeared to over-rule CEO Mark Rowsthorn in insisting on a $1.1 billion impairment charge. The entry currently reads as follows:
Asciano: reported a disappointing $1.1 billion impairment in 2009-10. The ports businesses were responsible for the write-down which, according to the company report, will have little effect on the overall business because of the performance of other business under the Asciano umbrella.
Cornwall on federal politics
Victoria shuts down council influence over pokies
After last week's Victorian pokies auction fiasco, the issue is once again going to be a major topic in the coming state election.
I'm weighing up a number of possibilities at the moment, including a possible tilt against Gaming Minister Tony Robinson in his marginal seat of Mitcham or a pokies-related campaign for a spot in the Victorian upper house.
The Sunday Herald Sun has been running very hard on the pokies lately and produced another cracking story eight days ago focusing on how councils are being side-lined by the new rules.
Also, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.
And finally, check out this 30 second anti-pokies ad made by Paul Bendat last financial year featuring our daughter Alice, who was 6 at the time:
Boart Longyear remuneration report defeat
We probably went a bit hard against outgoing Boart Longyear chairman and BCA President Graham Bradley in our last email edition.
Okay, he didn't resign because the remuneration report was defeated but all his bleating about institutional investors not contacting him directly was a bit over the top.
Here is an email from a fellow Boart Longyear shareholder who attended the AGM:
The chairman didn't infer that the remuneration report was the reason he jumped. When I asked him afterwards why did he think the report was outvoted he said he thought the insto guys took the advice of other insto guys and just ticked "Against" and he wasn't too happy they could do so without first consulting the company. He felt it was minor issues they were too focused on particularly the 400k he thought was thoroughly deserved as a bonus for 2 blokes that put in 9 hard weekends away from home during the height of the GFC. I would of thought they were just doing their high paying jobs or trying to save them, at least. Worthy of $1000/hour for some overtime, Hmmm? Not. The other thing that seemed a bit questionable was the 900,000, 15c options granted to Craig Kipp but this got through without question. Hmmm. The board seemed to me to consider themselves big time players of a global company and as such deserve the big bucks, maybe I'm too green for these things to appreciate such but I always thought the shareholders owned the company, not the management.
Donate to help keep us going as 6 AGMs beckon in Sydney this week
The Mayne Report costs almost $100,000 a year to run and we moved to a free model in June last year after struggling along seeking subscriptions for the first 21 months racking up almost $200,000 in losses.
Travel expenses exceeded $700 last week when we flew to Sydney for the Wallace EGM on Monday and then headed to Adelaide on Wednesday to prosecute the case against the all male boards at OZ Minerals and Adelaide Brighton.
The mini AGM season for companies with December 31 balance dates finishes this week and we're in Sydney on Thursday and Friday to attend four of the following six AGMs: Austar, Westfield, MAPGroup, James Hardie, Consolidated Media Holdings and Spark Infrastructure.
There are some clashes so we're still deciding which meetings to attend or whether to try and partially attend them all.
MAP gets some priority because I'm running for the board on the following platform which was sent to shareholders in the notice of meeting;
Mr Mayne has long argued that Macquarie Group's model of externally managed listed funds was fundamentally flawed from a governance perspective. Mr Mayne believes the $345 million divorce payment to Macquarie Group from MAp last year was excessive, especially when compared with the comparable arrangement negotiated by the independent directors of Macquarie Infrastructure Group. He believes the MAp Airports Ltd board needs a clear majority of directors independent of Macquarie and some fresh independent directors who were not associated with the $345 million payment.
See the full discussion about the MAP tilt in the April 26 edition.
It has been nice to receive more than $6000 worth of donations over the past few months and if you fancy giving us a hand to help fund our activism and keep us going on the AGM circuit, just click on the image below:
The Mayne Report Rich List
BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1400 names with those who've fallen back below $10 million now italicised. Below are our latest new or updated entries:
Malcolm Day: this Perth-based playboy who fronted Adultshop.com, the first adult company to be listed on the ASX, was once worth more than $100 million. Since the spectacular crash of Adultshop.com - during the dot com boom it was worth around $600 million, and in early 2010 its market value was just over $2 million, he has turned property developer and is said to be worth around $20 million.
Cornwall on resources tax
Tracking Kevin Rudd's debt binge
This list tracks all bond and treasury note issues by the Rudd Government since it was elected in November 2007. The latest federal bond issues are as follows and you'll note that interest rates are still north of the 4% assumed in last year's budget papers. Sky-rocketing public debt is a worry and here is the detail from Canberra's latest efforts:
Friday, May 21, 2010: $700m tender of 2 year bonds expiring in November 2012 were sold for an average yield of 4.64% and was over-subscribed 3.1 times.
Wednesday, May 19, 2010: $500m tender of 1 year bonds expiring in February 2017 were sold for an average yield of 5.27% and was over-subscribed 3.5 times.
Friday, May 14, 2010: $1 billion tender of 3 year bonds expiring in December 2013 were sold for an average yield of 5.19% and was over-subscribed 3.8 times.
Wednesday, May 12, 2010: $700m tender of 1 year bonds expiring in June 2011 were sold for an average yield of 4.44% and was over-subscribed 3 times.
Friday, May 7, 2010: $500m tender of 2 year bonds expiring in November 2012 were sold for an average yield of 4.90% and was over-subscribed 3.2 times.
Treading water on the capital raisings front
We've updated the world's largest small share portfolio as you can see here. The snapshot as of May 14, 2010 was a portfolio of 706 holdings worth $104,799. The overall paper loss was $4,577 and the average holding worth a miserable $148. There is a margin loan of about $60,000 supporting the portfolio with the only meaningful stakes being as follows:
ANZ prefs: $20,000 investment holding steady near the face value
CBA prefs: $17,500 investment holding steady
Myer: down $570 on a $9500 investment
Rio Tinto: down $400 on a $6500 investment
Harvey Norman: up $150 on recent $10,000 investment
Macarthur Coal: bought 400 on Friday morning at $9.70 and now up $300
In terms of recent capital raising plays, there hasn't been any big wins or losses since the last edition and the details are as follows:
May 14
Mirvac: $2000 into two $15,000 SPPs at $1.40 a share after placement. Exited half at $1.35 to lose about $100.
May 18
Sundance Energy: $15,000 into SPP at 13.5c after placement. Exited at 13.5c to break even.
May 19
K&S Holdings: $15,000 into SPP at $2.56. Exited at $2.54 for tiny loss.
The only current offer in play with the money down is as follows:
Supercheap Auto: $10,000 into $10,000 SPP at $4.80 after $54m Ray's Outdoor acquisition. Closed May 21 and trades May 27.
Assessing the capital raising pipeline
Here is the list of known offers in the pipeline which remain open and we're considering:
AFIC: $15,000 SPP at $4.90 or 2.5% discount to VWAP. Closes May 26.
CSG: $15,000 SPP at $1.90 which closes June 3 and trades June 10.
Gindalbie Metals: $10,000 SPP at 93c after placement which closes June 16 and trades July 5.
Mineral Deposits: $15,000 SPP at 95c which closes May 28.
Perseus: $15,000 SPP at $1.94 after placement. Closes May 25 and trades May 28.
Transfield Services Infrastructure fund: 5-for-12 entitlement offer at 70c with overs. Closes June 3 and trades June 11.
Radio
774 ABC Melbourne - discussing the dollar and the world of finance
819 ABC Adelaide - talking about the OZ Minerals and Adelaide Brighton AGM.
Crikey
Big miners should fund $200m campaign against RSPT
Monday, May 24
The blokes who should step aside for female directors
Friday, May 21
Mayne: Raking over the coals of OZ Minerals scandals
Thursday, May 20
Pokies, Gonski, red-faced Woolies, pollsters and censorship
Friday, May 14
Super: Reckless Labor's great unfunded swindle
Wednesday, May 12
Tales from the talk circuit
AIA National Investors Conference - Investment Strategies for Changing Markets
25 to 28 July 2010
Surfers Paradise Marriott Resort, Queensland
This conference is the only independent conference for investors across all asset classes. It is designed to be of value for all individual investors, whether novice or experienced, who wish to take control of their investments, whether it be through financial advisers and brokers or totally DIY. If you want high quality, value for money, truly independent education that will make you a better investor, attendance at this conference is a must.
The conference commences on Sunday evening 25 July with a keynote presentation by Jonathan Pain, Editor of The Pain Report. Regularly rated one of the top presenters at AIA National Investors Conferences, Jonathan will set the global scene for investors.
Sessions continue Monday, Tuesday and Wednesday finishing at 3:30pm on Wednesday, 28 July. In addition to the seven plenary sessions, six streams run through the program. Although you will not be locked in to all the sessions within a stream if you seek comprehensive coverage of the matters addressed by the stream, you would be advised to attend all the sessions related to the stream. The speakers and session outlines are provided in greater detail.
The New Australian Resource Rent Tax
Free public lecture to be given by Professor Ross Garnaut
Date: Thursday 20 May
Time: 6.30pm start
Venue: Basement Theatre, Faculty of Business and Economics Building, 198 Berkeley Street, Carlton
Ross Garnaut, with Anthony Clunies Ross, is the author of the 1975 article in The Economic Journal that opened global discussion of resource rent taxes, and of the authoritative 1983 book The Taxation of Mineral Rent, Clarendon Press, Oxford.
The Garnaut—Clunies Ross Resource Rent Tax has been applied in many countries including Australia for offshore petroleum (the Petroleum Resource Rent Tax, PRRT). Professor Garnaut will assess the proposed Resources Super Profits Tax as a form of mineral rent taxation, discuss transitional issues, and analyse its interaction with other policy issues in the resource sector — including Climate Change and carbon pricing, and the two-speed economy.
Professor Ross Garnaut is Vice-Chancellor's Fellow and Professorial Fellow in Economics at the University of Melbourne. He is also Distinguished Professor of Economics at The Australian National University.
For bookings and enquiries please contact Ms Penny Hope at the Melbourne Institute on 03 8344 2151 or melb-conf@unimelb.edu.au
Click here to read feedback after some speeches.
Mayne Report video blog
We have added more playlists to this collection of special edition videos. Check out the new News Corp playlist and the Super Ratings Conference speech. Watch these special edition videos here.
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Sign up for Mayne Report Tweets
We have only been twittering for a few months, but now have 1367 followers and are regularly dropping out the latest developments from AGMs, capital raising plays and even Manningham Council. Sign up below to get the latest updates from all our activity and check out some of the latest tweets:
9.13am May 25: Just attended brekky at Deloitte on the death of internal audit. Off to an AGM shortly with Lucy Turnbull then council meeting tonight.
5.07pm May 24: Spent the day at useful shareholders association training day for company monitors. Off to council meeting to consider planning application.
6.29pm May 23: Working on email edition with lead item on women on boards. Also preparing to present at training day for shareholders assocation 2morrow.
8.49pm May 22: Just spent 2 hours turning top 75 women directors into top 100 rankings. See: http://bit.ly/d3no6u
3.17pm May 21: Market is coming back. Bought 400 Macarthur Coal at $9.70 this morning. Have recovered to $10.30 but can't see $15 takeover bid returning.
2.10pm May 21: Have just named some of the blokes in Crikey who should quit directors club to make way for quality women. See: http://www.maynereport.com/
8.32pm May 20: Brian Jamieson today appointed chair of troubled Sigma Pharmaceutical. He should now quit OZ Minerals after 6 years as told at AGM yesterday
6.32pm May 19: 774 ABC Melbourne discussing the dollar, the market and global finance here http://video.maynereport.com/audio/774_190510.mp3
4.45pm May 19: Had a chat on ABC Radio in Adelaide about the AGMs. Have a listen here http://video.maynereport.com/audio/819_190510.mp3
11.03am May 19: In SA for OZ Minerals and Adelaide Brighton AGMs. Listen to the audio here http://www.maynereport.com/articles/2010/05/19-1443-925.html
2.05pm May 18: 7pm Project just withdrew approach to chat tonight about Tony Abbott dishonesty. Phew, would have meant appearing with shocker Steve Price!
12.10pm May 18: AXA AGM this morning at Jeff's shed. Have listen to our questions http://www.maynereport.com/articles/2010/05/18-1040-6828.html
11.20pm May 17: Attended fascinating Melbourne dinner focusing on lack of women on major boards and watching Lateline Business story on same topic now.
1.10pm May 17: Attended EGM for abysmal Wallace Absolute fund in Sydney where 2 reform candidates fell 3% short of win. Incumbents fleeing, doubts on vote.
3.44pm May 15: Victorian councils shafted on pokies power by Vic Labor govt yet again, according to Sunday Herald Sun. See: http://www.maynereport.com/
1.10pm May 14: Poor Peter Blunden. News Corp down $2m from his campaign to sack Guthrie and latest Herald Sun circ figures down 9000 and not reported 2day
1.07pm May 14: Morgan poll finds Labor primary down 3.5% to 36% and that Abbott would win election. Meanwhile, ASX continues to censor Gary Morgan on RSPT.
12.07pm May 14: Judge Stephen Kaye has awarded Bruce Guthrie $580,808 for being unfairly sacked on top of $934,000 he collected at the time. Details to come
3.01pm May 13: Good to see Fairfax broadsheets ran with our yarn about Gary Morgan speech censorship by ASX. See Tuesday links: http://www.maynereport.com/
11.28am May 13: How can Transurban chair David Ryan be making these big takeover decisions when he was ABC Learning chair and should be out of a job? Crazy.
8.17pm May 12: Great to see IMF (shares up 6% today) suing banks for penalty fees: http://imagesignal.comsec.com.au/asxdata/20100512/pdf/01063349.pdf
6.13pm May 12: Joe Hockey's latest tweet is right. Why is education union getting $10m budget grant. Is that pay-off for ending Naplan boycott? Appalling.
4.17pm May 12: Look at corporate heavies donating to BrettClegg-Hepworth journos charity push. Inappropriate: http://www.gofundraise.com.au/AnnabelHepworth
2.14pm May 12: Can't believe Woolworths is still yet to make ASX announcement about estimated $200m-plus they've paid in Victoria's pokies auction flop.
8.33am May 12: Another big hit on pokies industry on Seven's Today Tonight this evening. Watch the damaging video: http://au.todaytonight.yahoo.com/video#
8.33pm May 11: Only $981m raised in Vic pokies auction. Disaster. Also, see latest edition: http://www.maynereport.com/articles/2010/05/03-1035-4668.html
5.55pm May 11: See speech by Gary Morgan at Haoma EGM today which ASX refuses to publish http://www.haoma.com.au/2010/ChairmansAddress-May112010Final.pdf
5.14pm May 11: Boart Longyear remuneration report defeated at today's AGM. Chairman Graham Bradley announces resignation. He's BCA President so big scalp.
8.33am May 11: Peabody cuts Macarthur offer by $250m due so super tax. So what? It's 46% owned by Posco of Sth Korea, Chinese Govt and Arcellor of India.
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.
Greetings for the first time since our last email edition on May 11 and we hope that you'll enjoy the broad range of content on offer, spanning women on boards, the AGM season, this week's MAP board tilt, pokies, local government, the Rich List and plenty of other lively material.
Do ya best, Stephen Mayne
* To unsubscribe from this fortnightly email newsletter, click here. Alternatively, tell your friends to sign up here for an interesting free read.
Ranking the top 100 women on boards
This list ranking the top Australian female directors has been viewed more than 2000 times in 2010 and we put another three hours into it over the weekend expanding it from a top 75 to top 100, fixing up links, correcting errors and re-jigging the rankings.
For instance, CSL chair Elizabeth Alexander has been dropped from two to five due to reports of two incidents: she has been heard to argue that institutional investors shouldn't even have the vote and as AICD President she apparently argued against the need for a comprehensive code of ethics.
That said, I still really admired Elizabeth when Boral won Ethical Investor Magazine's 2007 corporate governance award and it was explained that as audit committee chair the whistleblower calls went direct to her and 50 employees got the punt that year for breaches of company policy.
Pushing the issue of gender diversity on boards has become a top priority over the past six months as you can see from this package of audio exchanges from the David Jones, Seek, OZ Minerals, Adelaide Brighton, NAB and AXA AGMs. I'll be attending the Melbourne IT AGM at 11am this morning where Lucy Turnbull is the only female director.
There was also this piece for Crikey last week naming the largely old blokes who should be retiring. We've expanded this into a separate list on The Mayne Report and would again welcome your suggestions.
I also attended a dinner in Melbourne last week with plenty of male and female directors which explicitly tackled the issue of how women build their board portfolio.
At a meeting the previous week with a woman who features in the top half or our top 100 list, she made the claim that no woman she knows has a full portfolio of board commitments. Reading through the list, I would argue that most of those in the top 10 have full workloads and the likes of Linda Nicholls, Catherine Livingstone and Caroline Hewson are arguably doing too much.
Finally, we've sent this edition to some of the top female executives and directors in the country in the hope they'll assist with the crowd-sourced rankings and provide further input.
And when sending in confidential feedback, we'd love you to participate in a project I've just commenced of asking top directors to name the board colleagues they most admire and why? Here's three examples of positive feedback about female directors:
Margaret Jackson: far more commercial than other top females around.
Caroline Hewson: very thorough, has always digested the board papers and makes good contributions.
Catherine Livingstone: very thorough, diligent, calm and thoughtful.
The campaign to purge blokey Transurban of its chairman
The AFR is a hard newspaper to follow sometimes. Reporter Jennifer Wiggins requested some background information last week for a piece in Saturday's paper about embattled Transurban chairman David Ryan who, since the departure of Susan Oliver, has led an all-male board.
Having led the charge against Ryan at the last two Transurban AGMs, I was happy to help out The AFR on the telephone and through email.
Indeed, this edition of The Mayne Report was even delayed so the paper could report first that there would be a shareholder resolution seeking the removal of Mr Ryan at this year's AGM if he doesn't resign first.
Lo and behold, the story ran on Saturday about Ryan being under increasing pressure, but there was no mention of the promised shareholder resolution. I've subsequently sent a letter for publication spelling out this plan but is still hasn't been published.
Even if The AFR can't bring itself to report this coming move, surely Transurban chairman David Ryan won't be there by Christmas. It was remarkable that he survived the scandal of being in the chair of ABC Learning when it collapsed in 2008.
The bloke clearly needs the $420,000 a year he pockets from Transurban after being margin called out of his 249,106 ABC Learning shares at the price of $1.895 each in February 2008. Check out the only margin call statement ever lodged by a top 50 chairman.
Fast forward two years and the Transurban board has summarily rejected a $5.42 a share takeover offer from Peter Doherty's CP2, plus two Canadian government pension funds.
The funds explained that they would rather have exposure to unlisted tollroad assets, but Ryan's board got greedy and rebuffed them.
The Ontario Teachers Pension Plan responded by dumping their 12% stake at an estimated $4.44 each last week and the stock has since fallen further to $4.38 - almost 20% below the mooted offer price. That's more than $1 billion we're talking about here.
I have absolutely no confidence in David Ryan's leadership and can't believe he continues to be paid more than $1000 a day by Transurban shareholders after he received an unprecedented 34% against vote at the 2008 AGM.
If the Transurban board don't wake up to reality and move on Ryan, then there will be a resolution that he be sacked at the next AGM in October.
Peter Doherty made some very interesting statements to Alan Kohler on Inside Business two weeks ago. In essence he accused the board of failing to pursue an agreed course of dialogue and acting to save their own jobs rather than maximise value for all shareholders.
The counter-argument is that the three suitors spat the dummy when Transurban paid $600 million to pick up the Lane Cove Tunnel, which the board chose to fund through a rights issue at $4.60 which is now under-water.
Finally, here's a package of interesting links related to Transurban:
Audio from 2009 Transurban AGM over Ryan's ABC Learning baggage
The written account of 2008 Transurban AGM
Businessday article after last year's Transuban AGM
Mayne Report edition on departure of previous Transurban chair, the conflicted Laurie Cox
Political censorship on the ASX and tomorrow's Rio Tinto AGM
Gary Morgan caused quite a stir with his attacks on the ASX for censoring his criticisms of the resources super tax and it was again picked up last week by Terry McCrann in the Herald Sun and Ian McIlwraith in The Age after BHP was allowed to get away with similar "political" statements.
Here are some of the relevent links:
ASX must focus on the message, not the mouthpiece
Terry McCrann, HeraldSun, May 18, 2010
ASX slammed for tax comment 'censorship'
Barry Fitzgerald, BusinessDay.com.au, May 12, 2010
Gary Morgan, Haoma Chairman Lashes Out at ASX Censorship
John Elliott, The John Elliot Report, May 13, 2010
Gary's uncensored address can be viewed on Haoma's website www.haoma.com.au. It will be very interesting to watch how hard the Rio Tinto heavies go at tomorrow's AGM in Melbourne. There will be be numerous issues to go through, some of which were canvassed in this Crikey story about political donations yesterday.
Audio highlights from AXA AGM
The AXA Asia Pacific Holdings AGM in Melbourne on May 18 was remarkable for the fact that I was the only shareholder who raised the $14 billion takeover battle currently being waged by AMP, NAB and the controlling French parent, with the ACCC acting as umpire.
The media picked up on a couple of the issues from the AGM as you see from this piece on NineMSN which included the following:
While AXA APH's board still endorses NAB's tilt, when asked by shareholder activist Stephen Mayne if Tuesday's annual meeting would be the company's last, Mr Allert replied: "Who knows Stephen? Who knows?"
Mr Allert was re-elected as AXA APH's chairman, with Mr Mayne applauding his track record of selling Coles Myer to Wesfarmers, and Southcorp to Foster's, at a high price.
"I think Mr Allert has an excellent record of persuading major companies to pay too much," Mr Mayne said.
"I hope you can complete the trifecta and complete a deal in which AMP, NAB and the French parent will pay a very full price to reward shareholders."
Here are the full edited audio highlights complete with summaries of their relevence underneath:
What have you done about pathetic SPP take up?
Went to the heart of the issue of shareholder apathy raised in this businessday article last year.
Is this our last AGM? How are you handling Paris and how much have we spent on takeover process?
Extracted the useful fact that advisory fees for the takeover had hit $7 million by the end of 2009.
What is the success fee formula for Macquarie? Is there a greater focus on internal audit post GFC? Provide examples of active corporate governance voting
This was the second AGM after GPT the previous week where internal audit was raised, something the profession is keen to happen in a post-GFC world where governance is more important than ever.
Strongly supporting the re-election of chairman Rick Allert
Whilst Allert wasn't orginally in our top 100 male directors list due to the Coles and Southcorp records, two of his fellow directors have now privately named him as the best director they've worked with so the endorsement was thoroughly deserved.
You need more women on your board and what is Paul Sampson's level of contact with Paris?
The only female AXA director is former McKinsey consultant Patricia Akopiantz who comes in at number 25 on our list of top female directors and followed Rick Allert from the Coles board to Axa. It is clearly too late to add a second female now but this will hopefully happen if Axa remains independently listed. Interestingly, Patty Akopiantz joined the Coles board after then CEO John Fletcher declared he wanted "someone I've never heard of before". If the director gene pool is ever going to be seriously deepened and diversified, we need more people with an attitude like that.
The director shareholdings are too low and explain payout scenarios for CEO and directors in takeover deals
Too often takeovers are approved when there are promises of extra payments or sinecures to the directors and senior management. With NAB offering Axa no board seats and no guarantee of a job for its strongly performing CEO Andy Penn, this only appears relevent if AMP comes back to the table given it offered two board seats.
You can see all the action from last year's AXA AGM plus plenty of other interesting material from this member edition sent 12 months ago.
Click the link below to get the latest radio and AGM audio:
Getting stuck into the blokey OZ Minerals board
OZ Minerals is one of many listed companies with no female directors and its AGM in Adelaide last Wednesday was a lively affair as was explained in this piece for Crikey on Thursday.
The board was slammed on several issues and the edited audio highlights were as follows:
How have you managed the currency risk?
They seem to have managed an average US80c conversion after getting $US1.354 billion for all its assets excluding Prominent Hill from the Chinese Government last year.
Will you accept you made mistakes selling off our assets?
The new chairman Neil Hamilton didn't seem well across his brief but did accept shareholders would "probably" be better off today without the MinMetals deal.
I am worried about your class action liability.
IMF and Maurice Blackburn, the class action lawyers suing the company over its poor disclosure, would have loved this spray.
Where does Neil live? Voting in support of chairman
Hmmm, here we have a chairman with residences in Perth and Sydney, leading a Melbourne-based company with one asset, located in the South Australian desert. I made the point that out of town chairs are not desirable but we shall see how this pans out.
Voting against the re-election of Brian Jamieson.
Brian has been an Oxiana director since 2004 and was confirmed as the new chairman of Sigma Pharmaceutical the day after being re-elected at the OZ Minerals AGM. Chairman Hamilton confirmed that Brian's extra responsibilities had been discussed by the board that morning but they all stuck by him. This position should be reconsidered as Brian is over-committed and his performance at Oz Minerals warrants a resignation.
Voting against the remuneration report.
A strongly worded reminder of the scandal that was Owen Hegarty's $8.35 million payout and how this crippled the company's ability to raise equity in its hour of need.
Activism comes to Wallace Absolute Return debacle
The Wallace Absolute Return fund has been an absolute dog so it was good to see one of the largest shareholders called an EGM in Sydney for last Monday and attempted to install two new directors.
The SMH has given the story a good run as you can see from this package but it was disappointing the challengers came up about 3% short.
Activist fund manager Gabriel Radzyminski, one of the two proposed new directors, flagged afterwards that he was concerned with the integrity of the voting outcome.
As you can see from this package of audio highlights, I asked several questions at the EGM and also hopped into the voting system in Australia which provides for no electronic audit trail.
The Cornwall collection
Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing to The Mayne Report since March 2009. Here is a collection of his best cartoons and there are now also some amusing animations.
How Australia's biggest listed investment company tricked some shareholders
AFIC is the nation's biggest listed investment company and normally a pillar of conservative prudence chaired by long-time JB Were supremo Bruce Teele.
Therefore, it came as quite a surprise to read this letter the board was sent by a shareholder about its current share purchase plan:
I am writing to complain about the unfair terms of the current Share Purchase Plan (SPP). The SPP which is priced at the lower of $ 4.90 or a 2.5% discount from the VWAP in the five business days leading up to its closure on 26 May 2010, does not currently represent any discount at all. In fact, after allowing for the final dividend (which was 13c fully franked last year and SPP buyers will NOT receive this year), you are actually selling shares at a premium. If you are serious about promoting the SPP you will use a different pricing mechanism. It is hardly fair to price a share issue at a cum dividend price when the relevant shares are being issued on a ex dividend basis. This will eliminate any so called "discount" unless your share price increases materially over the next few weeks.
The bottom line is why don't you use an ex dividend pricing mechanism or lower the $ 4.90 price to encourage participation? I am also concerned that shareholders may participate without realising that they will not receive the final dividend, which is not payable for quite a few months (and would normally be payable in circumstances where the SPP is conducted well before the end of the relevant year and the ex dividend date).
I would have blindly transferred the $15,000 through by now if it wasn't for this letter alerting me to the trap. With the stock closing at a miserable $4.65 on Friday, it will be interesting to see how many people get suckered into it. We'll be definitely raising this issue at the October AGM.
Google Android, Apple apps and publishers
By Shane Marden, our multi-media manager
Alan Kohler wrote this interesting piece for Business Spectator on May 13 about the impending war between Google Android's free operating system for mobile devices, and Apple's applications for the iphone and ipad. Similar to the battle from the past between Microsoft and Apple, it will be interesting to see who wins out - Google, Apple or the consumer.
Apple have always been a "closed" system which has been one their biggest advantages, but has also held them back in the past. Apple have always designed the hardware but also the software. This has meant that security against viruses and the like has always been greater because the PC can have literally thousands of companies having input into software or creating their own.
With this sort of dilution, there are always going to be technical problems, but the advantages are far cheaper computers and software for the consumer, and being an open platform, there are literally millions of options for the user to implement - software and applications. People are on the move.
Consumer behavior is trending towards having the full computer experience via some kind of mobile device. Blackberry still lead the charge with a 36% market share, but recently Google Android mobile device has taken over the iphone in the US. What does this mean for the publisher and the consumer?
While the war rages, there will be many benefits for the consumer. Devices will become better. Software will get better. The user experience will be more exciting, seamless, organised and hopefully less frustrating.
What does it mean for the online publisher?
Well at the moment, whilst the market sorts itself out, it is prudent, and still relatively expensive, for the publisher to cover all bets. Making sure their web home is compatible with non-Apple devices, but also spending the money creating Apps for Apple devices.
Why do both?
Well, eventually I believe it will be a matter of different strokes for different folks. Similar to the Apple vs Microsoft battle, these days there is a place for both. Depending on what outcomes the publisher and the consumer want, will determine the choices they make. Apple have the sexiest devices, their applications are currently far richer and easier to use, but more expensive. Google Android is more popular, cheaper, and will eventually offer a far more richer experience.
People are on connected and on the move, so publishers, get moving!
Firing up our Youtube channel again
When The Mayne Report first launched in 2007 we were posting daily videos on Youtube. Alas, the cost and time of in-house video production, plus the lack of any revenue, made this model unviable. Besides, daily videos wasn't necessarily the best way to campaign for better corporate governance through shareholder activism.
In the end, it made more sense to channel our efforts into appearing on other people's videos, such as these two recent appearance on Ten's The 7pm Project, rather than trying to build an audience from scratch.
However, when you look back at all the video we've got spanning our own productions, one-off interviews, profiles or lenthy interviews such as Nine's Sunday program or ABC TV's Talking Heads, the monthly spot on Sky's Business View and webcasts of AGMs, it turns out we've got a rather large library of material.
Cross-posting has become much easier now, so we have relaunched our youtube channel and hope you enjoy our many playlists of material. If you have the right app, you can view the videos on the go using any mobile device - free and easy, so subscribe today!
Gindalbie shows how to raise capital without enriching investment banks
Perth-based Gindalbie Metals showed the way with a capital raising earlier this month that wasn't under-written.
Lo and behold, the board even opted for a market driven tool for price discovery, namely a bookbuild to determine how much institutional investors would pay for a non-under-written share placement.
As events turned out, the discount proved pretty steep which probably reflected the environment of a falling market and all the uncertainty over the proposed new resources tax.
However, what we really liked about the offer structure was the way the Chinese Government, which owns a cornerstone 36% stake through Ansteel, agreed to pay the same price as the institutions and bought enough shares to retain its relative position.
So when the instos coughed up $112 million at 93c, Ansteel agreed to spend $63 million at 93c and will top that up once we see how the coming $20 million share purchase plan at 93c for retail investors fares.
Rather than paying an estimated $2 billion to the global investment banking cartel for underwriting services that carried sod all risk, often for just a day or two, more companies should have followed the Gindalbie lead.
After all, when Macquarie did a $500 million placement last year, it wasn't under-written. Doesn't that tell everyone under-writing gouges were something the smartest people in the room tended to avoid.
What blokey Adelaide Brighton could have learnt from blokey Gindalbie
The contrast between Gindablie's effort and the raising from Adelaide Brighton 12 months ago was stark indeed. Despite our opportunistic $2500 profit from Adelaide Brighton, the poor structuring of its offer contributed to our decision to fly to Adelaide for the 2010 AGM last Wednesday.
The board was given a rocket for paying Credit Suisse an estimated $1 million under-writing fee for literally taking on 24 hours of market risk on a $75 million placement which was already at a hefty discount to the market price.
We also gave the all-male board both barrels for leaving the door open on its subsequent SPP, allowing literally thousands of opportunists (including a couple of my associates) to profit at the expense of loyal shareholders who found themselves scaled back from $10,000 worth of shares at $1.78 to just $5000.
The board did not really try and defend themselves as you can hear in this audio file of the exchanges.
Meanwhile, here are the other edited audio highlights from the first Adelaide Brighton AGM in recent memory where shareholders actually put the directors through their paces on a range of issues:
Could you tell us about the Boral exit, and what is the relationship with them now?
Why did Mr Barrow requisition an EGM to appoint James Mackenzie to the board?
In this board renewal I hope they adopt a fresher approach.
Here's hoping the new chairman can find a female director
Have the directors received a pay rise so far in 2010? What is the new chairman's fee?
If the CEO is terminated does he still get the full 1.8 million free shares?
What proportion of the 1600 staff own shares in the company?
Blokey Bradken joins the SPP shame file
For retail investors, there is nothing worse than a company doing a discounted institutional placement with the big end of town and then not following through with a share purchase plan for retail investors.
Whilst it is always fairer to raise capital on a pro rata basis, companies like the speed and lower cost of placements but are increasingly looking after retail when this happens.
However, there are always a few exceptions to the rule and we've been listing them on our SPP shame file list dating back to 2007.
Bradken, which is chaired by former NSW Premier Nick Greiner, is the latest offender after it announced a $50 million institutional placement offer to fund the acquisition of Canada's Almac Machine Works, without any offer for retail shareholders.
Here is the text of an email the company was sent by one angry shareholder:
As a small shareholder who plans to be a long term investor, I feel angry that my shareholding is going to be diluted by the forthcoming institutional placement. The fact that you announce the placement on the same day as a profit upgrade and the announcement of the Canadian purchase stinks. Because the market hasn't had time to react to the
upgrade or the purchase, no-one is in a position to know whether the terms of the placement are fair or very cheap.
As some-one who saw massive dilution on some shareholdings over the last two years at ridiculous prices, without any opportunity to participate, I feel that I, along with all other shareholders, am being denied the opportunity to invest on equal terms into your enlarged company.
During the GFC I participated in a number of capital raisings. Unlike most institutions, I have retained almost all the shares I purchased during that period. I am sure that most institutions churned theirs almost immediately. The effect of that is to dilute the loyal shareholder base and give the institutions a quick profit at the retail shareholders' expense.
Could you please detail the additional costs, if any, involved in making the capital raising available to all shareholders. Could you also give any other reasons why you chose the institutional raising.
Yours faithfully, Robert
Asciano to score another entry on our $100m loss club
A then record 29 ASX-listed companies reported losses of more than $100 million in 2007-08. The GFC saw this soar to another record of 52 companies in 2008-09. That's a pretty amazing statistic given that we had previously only found 75 companies that have achieved that milestone more than 150 times over the past 20 years. Check out where they rank in this league ladder of corporate disasters, plus this chronological version.
Meanwhile, Asciano is about to join the club again after the three new directors, including new chairman Malcolm Broomhead, appeared to over-rule CEO Mark Rowsthorn in insisting on a $1.1 billion impairment charge. The entry currently reads as follows:
Asciano: reported a disappointing $1.1 billion impairment in 2009-10. The ports businesses were responsible for the write-down which, according to the company report, will have little effect on the overall business because of the performance of other business under the Asciano umbrella.
Cornwall on federal politics
Victoria shuts down council influence over pokies
After last week's Victorian pokies auction fiasco, the issue is once again going to be a major topic in the coming state election.
I'm weighing up a number of possibilities at the moment, including a possible tilt against Gaming Minister Tony Robinson in his marginal seat of Mitcham or a pokies-related campaign for a spot in the Victorian upper house.
The Sunday Herald Sun has been running very hard on the pokies lately and produced another cracking story eight days ago focusing on how councils are being side-lined by the new rules.
Also, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.
And finally, check out this 30 second anti-pokies ad made by Paul Bendat last financial year featuring our daughter Alice, who was 6 at the time:
Boart Longyear remuneration report defeat
We probably went a bit hard against outgoing Boart Longyear chairman and BCA President Graham Bradley in our last email edition.
Okay, he didn't resign because the remuneration report was defeated but all his bleating about institutional investors not contacting him directly was a bit over the top.
Here is an email from a fellow Boart Longyear shareholder who attended the AGM:
The chairman didn't infer that the remuneration report was the reason he jumped. When I asked him afterwards why did he think the report was outvoted he said he thought the insto guys took the advice of other insto guys and just ticked "Against" and he wasn't too happy they could do so without first consulting the company. He felt it was minor issues they were too focused on particularly the 400k he thought was thoroughly deserved as a bonus for 2 blokes that put in 9 hard weekends away from home during the height of the GFC. I would of thought they were just doing their high paying jobs or trying to save them, at least. Worthy of $1000/hour for some overtime, Hmmm? Not. The other thing that seemed a bit questionable was the 900,000, 15c options granted to Craig Kipp but this got through without question. Hmmm. The board seemed to me to consider themselves big time players of a global company and as such deserve the big bucks, maybe I'm too green for these things to appreciate such but I always thought the shareholders owned the company, not the management.
Donate to help keep us going as 6 AGMs beckon in Sydney this week
The Mayne Report costs almost $100,000 a year to run and we moved to a free model in June last year after struggling along seeking subscriptions for the first 21 months racking up almost $200,000 in losses.
Travel expenses exceeded $700 last week when we flew to Sydney for the Wallace EGM on Monday and then headed to Adelaide on Wednesday to prosecute the case against the all male boards at OZ Minerals and Adelaide Brighton.
The mini AGM season for companies with December 31 balance dates finishes this week and we're in Sydney on Thursday and Friday to attend four of the following six AGMs: Austar, Westfield, MAPGroup, James Hardie, Consolidated Media Holdings and Spark Infrastructure.
There are some clashes so we're still deciding which meetings to attend or whether to try and partially attend them all.
MAP gets some priority because I'm running for the board on the following platform which was sent to shareholders in the notice of meeting;
Mr Mayne has long argued that Macquarie Group's model of externally managed listed funds was fundamentally flawed from a governance perspective. Mr Mayne believes the $345 million divorce payment to Macquarie Group from MAp last year was excessive, especially when compared with the comparable arrangement negotiated by the independent directors of Macquarie Infrastructure Group. He believes the MAp Airports Ltd board needs a clear majority of directors independent of Macquarie and some fresh independent directors who were not associated with the $345 million payment.
See the full discussion about the MAP tilt in the April 26 edition.
It has been nice to receive more than $6000 worth of donations over the past few months and if you fancy giving us a hand to help fund our activism and keep us going on the AGM circuit, just click on the image below:
The Mayne Report Rich List
BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1400 names with those who've fallen back below $10 million now italicised. Below are our latest new or updated entries:
Malcolm Day: this Perth-based playboy who fronted Adultshop.com, the first adult company to be listed on the ASX, was once worth more than $100 million. Since the spectacular crash of Adultshop.com - during the dot com boom it was worth around $600 million, and in early 2010 its market value was just over $2 million, he has turned property developer and is said to be worth around $20 million.
Cornwall on resources tax
Tracking Kevin Rudd's debt binge
This list tracks all bond and treasury note issues by the Rudd Government since it was elected in November 2007. The latest federal bond issues are as follows and you'll note that interest rates are still north of the 4% assumed in last year's budget papers. Sky-rocketing public debt is a worry and here is the detail from Canberra's latest efforts:
Friday, May 21, 2010: $700m tender of 2 year bonds expiring in November 2012 were sold for an average yield of 4.64% and was over-subscribed 3.1 times.
Wednesday, May 19, 2010: $500m tender of 1 year bonds expiring in February 2017 were sold for an average yield of 5.27% and was over-subscribed 3.5 times.
Friday, May 14, 2010: $1 billion tender of 3 year bonds expiring in December 2013 were sold for an average yield of 5.19% and was over-subscribed 3.8 times.
Wednesday, May 12, 2010: $700m tender of 1 year bonds expiring in June 2011 were sold for an average yield of 4.44% and was over-subscribed 3 times.
Friday, May 7, 2010: $500m tender of 2 year bonds expiring in November 2012 were sold for an average yield of 4.90% and was over-subscribed 3.2 times.
Treading water on the capital raisings front
We've updated the world's largest small share portfolio as you can see here. The snapshot as of May 14, 2010 was a portfolio of 706 holdings worth $104,799. The overall paper loss was $4,577 and the average holding worth a miserable $148. There is a margin loan of about $60,000 supporting the portfolio with the only meaningful stakes being as follows:
ANZ prefs: $20,000 investment holding steady near the face value
CBA prefs: $17,500 investment holding steady
Myer: down $570 on a $9500 investment
Rio Tinto: down $400 on a $6500 investment
Harvey Norman: up $150 on recent $10,000 investment
Macarthur Coal: bought 400 on Friday morning at $9.70 and now up $300
In terms of recent capital raising plays, there hasn't been any big wins or losses since the last edition and the details are as follows:
May 14
Mirvac: $2000 into two $15,000 SPPs at $1.40 a share after placement. Exited half at $1.35 to lose about $100.
May 18
Sundance Energy: $15,000 into SPP at 13.5c after placement. Exited at 13.5c to break even.
May 19
K&S Holdings: $15,000 into SPP at $2.56. Exited at $2.54 for tiny loss.
The only current offer in play with the money down is as follows:
Supercheap Auto: $10,000 into $10,000 SPP at $4.80 after $54m Ray's Outdoor acquisition. Closed May 21 and trades May 27.
Assessing the capital raising pipeline
Here is the list of known offers in the pipeline which remain open and we're considering:
AFIC: $15,000 SPP at $4.90 or 2.5% discount to VWAP. Closes May 26.
CSG: $15,000 SPP at $1.90 which closes June 3 and trades June 10.
Gindalbie Metals: $10,000 SPP at 93c after placement which closes June 16 and trades July 5.
Mineral Deposits: $15,000 SPP at 95c which closes May 28.
Perseus: $15,000 SPP at $1.94 after placement. Closes May 25 and trades May 28.
Transfield Services Infrastructure fund: 5-for-12 entitlement offer at 70c with overs. Closes June 3 and trades June 11.
Radio
774 ABC Melbourne - discussing the dollar and the world of finance
819 ABC Adelaide - talking about the OZ Minerals and Adelaide Brighton AGM.
Crikey
Big miners should fund $200m campaign against RSPT
Monday, May 24
The blokes who should step aside for female directors
Friday, May 21
Mayne: Raking over the coals of OZ Minerals scandals
Thursday, May 20
Pokies, Gonski, red-faced Woolies, pollsters and censorship
Friday, May 14
Super: Reckless Labor's great unfunded swindle
Wednesday, May 12
Tales from the talk circuit
AIA National Investors Conference - Investment Strategies for Changing Markets
25 to 28 July 2010
Surfers Paradise Marriott Resort, Queensland
This conference is the only independent conference for investors across all asset classes. It is designed to be of value for all individual investors, whether novice or experienced, who wish to take control of their investments, whether it be through financial advisers and brokers or totally DIY. If you want high quality, value for money, truly independent education that will make you a better investor, attendance at this conference is a must.
The conference commences on Sunday evening 25 July with a keynote presentation by Jonathan Pain, Editor of The Pain Report. Regularly rated one of the top presenters at AIA National Investors Conferences, Jonathan will set the global scene for investors.
Sessions continue Monday, Tuesday and Wednesday finishing at 3:30pm on Wednesday, 28 July. In addition to the seven plenary sessions, six streams run through the program. Although you will not be locked in to all the sessions within a stream if you seek comprehensive coverage of the matters addressed by the stream, you would be advised to attend all the sessions related to the stream. The speakers and session outlines are provided in greater detail.
The New Australian Resource Rent Tax
Free public lecture to be given by Professor Ross Garnaut
Date: Thursday 20 May
Time: 6.30pm start
Venue: Basement Theatre, Faculty of Business and Economics Building, 198 Berkeley Street, Carlton
Ross Garnaut, with Anthony Clunies Ross, is the author of the 1975 article in The Economic Journal that opened global discussion of resource rent taxes, and of the authoritative 1983 book The Taxation of Mineral Rent, Clarendon Press, Oxford.
The Garnaut—Clunies Ross Resource Rent Tax has been applied in many countries including Australia for offshore petroleum (the Petroleum Resource Rent Tax, PRRT). Professor Garnaut will assess the proposed Resources Super Profits Tax as a form of mineral rent taxation, discuss transitional issues, and analyse its interaction with other policy issues in the resource sector — including Climate Change and carbon pricing, and the two-speed economy.
Professor Ross Garnaut is Vice-Chancellor's Fellow and Professorial Fellow in Economics at the University of Melbourne. He is also Distinguished Professor of Economics at The Australian National University.
For bookings and enquiries please contact Ms Penny Hope at the Melbourne Institute on 03 8344 2151 or melb-conf@unimelb.edu.au
Click here to read feedback after some speeches.
Mayne Report video blog
We have added more playlists to this collection of special edition videos. Check out the new News Corp playlist and the Super Ratings Conference speech. Watch these special edition videos here.
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Sign up for Mayne Report Tweets
We have only been twittering for a few months, but now have 1367 followers and are regularly dropping out the latest developments from AGMs, capital raising plays and even Manningham Council. Sign up below to get the latest updates from all our activity and check out some of the latest tweets:
9.13am May 25: Just attended brekky at Deloitte on the death of internal audit. Off to an AGM shortly with Lucy Turnbull then council meeting tonight.
5.07pm May 24: Spent the day at useful shareholders association training day for company monitors. Off to council meeting to consider planning application.
6.29pm May 23: Working on email edition with lead item on women on boards. Also preparing to present at training day for shareholders assocation 2morrow.
8.49pm May 22: Just spent 2 hours turning top 75 women directors into top 100 rankings. See: http://bit.ly/d3no6u
3.17pm May 21: Market is coming back. Bought 400 Macarthur Coal at $9.70 this morning. Have recovered to $10.30 but can't see $15 takeover bid returning.
2.10pm May 21: Have just named some of the blokes in Crikey who should quit directors club to make way for quality women. See: http://www.maynereport.com/
8.32pm May 20: Brian Jamieson today appointed chair of troubled Sigma Pharmaceutical. He should now quit OZ Minerals after 6 years as told at AGM yesterday
6.32pm May 19: 774 ABC Melbourne discussing the dollar, the market and global finance here http://video.maynereport.com/audio/774_190510.mp3
4.45pm May 19: Had a chat on ABC Radio in Adelaide about the AGMs. Have a listen here http://video.maynereport.com/audio/819_190510.mp3
11.03am May 19: In SA for OZ Minerals and Adelaide Brighton AGMs. Listen to the audio here http://www.maynereport.com/articles/2010/05/19-1443-925.html
2.05pm May 18: 7pm Project just withdrew approach to chat tonight about Tony Abbott dishonesty. Phew, would have meant appearing with shocker Steve Price!
12.10pm May 18: AXA AGM this morning at Jeff's shed. Have listen to our questions http://www.maynereport.com/articles/2010/05/18-1040-6828.html
11.20pm May 17: Attended fascinating Melbourne dinner focusing on lack of women on major boards and watching Lateline Business story on same topic now.
1.10pm May 17: Attended EGM for abysmal Wallace Absolute fund in Sydney where 2 reform candidates fell 3% short of win. Incumbents fleeing, doubts on vote.
3.44pm May 15: Victorian councils shafted on pokies power by Vic Labor govt yet again, according to Sunday Herald Sun. See: http://www.maynereport.com/
1.10pm May 14: Poor Peter Blunden. News Corp down $2m from his campaign to sack Guthrie and latest Herald Sun circ figures down 9000 and not reported 2day
1.07pm May 14: Morgan poll finds Labor primary down 3.5% to 36% and that Abbott would win election. Meanwhile, ASX continues to censor Gary Morgan on RSPT.
12.07pm May 14: Judge Stephen Kaye has awarded Bruce Guthrie $580,808 for being unfairly sacked on top of $934,000 he collected at the time. Details to come
3.01pm May 13: Good to see Fairfax broadsheets ran with our yarn about Gary Morgan speech censorship by ASX. See Tuesday links: http://www.maynereport.com/
11.28am May 13: How can Transurban chair David Ryan be making these big takeover decisions when he was ABC Learning chair and should be out of a job? Crazy.
8.17pm May 12: Great to see IMF (shares up 6% today) suing banks for penalty fees: http://imagesignal.comsec.com.au/asxdata/20100512/pdf/01063349.pdf
6.13pm May 12: Joe Hockey's latest tweet is right. Why is education union getting $10m budget grant. Is that pay-off for ending Naplan boycott? Appalling.
4.17pm May 12: Look at corporate heavies donating to BrettClegg-Hepworth journos charity push. Inappropriate: http://www.gofundraise.com.au/AnnabelHepworth
2.14pm May 12: Can't believe Woolworths is still yet to make ASX announcement about estimated $200m-plus they've paid in Victoria's pokies auction flop.
8.33am May 12: Another big hit on pokies industry on Seven's Today Tonight this evening. Watch the damaging video: http://au.todaytonight.yahoo.com/video#
8.33pm May 11: Only $981m raised in Vic pokies auction. Disaster. Also, see latest edition: http://www.maynereport.com/articles/2010/05/03-1035-4668.html
5.55pm May 11: See speech by Gary Morgan at Haoma EGM today which ASX refuses to publish http://www.haoma.com.au/2010/ChairmansAddress-May112010Final.pdf
5.14pm May 11: Boart Longyear remuneration report defeated at today's AGM. Chairman Graham Bradley announces resignation. He's BCA President so big scalp.
8.33am May 11: Peabody cuts Macarthur offer by $250m due so super tax. So what? It's 46% owned by Posco of Sth Korea, Chinese Govt and Arcellor of India.
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.