Two strange Macquarie tales, Babcock, new video and AGM records
February 2, 2010
Dear Mayne Reporters,
in today's brief update we've got four stories but first, do check out this lively new video (after 6.10pm) on Insiders, Inside Business, Barrie Cassidy, Alan Kohler and some porkies from the PM, along with a case of mistaken identity.
Nicholas Moore's struggling banking magazine investment
As new Macquarie Group CEO Nicholas Moore gets ready for his first AGM presentation on July 23 at Melbourne's Crown Casino, one of his private investments is causing concern.
Sydney Liberal Party figure Peter Charlton had for a long time controlled a little business which includes trade magazine Australian Banking & Finance. I used to contribute articles to it in the early 1990s, just after the name change from Sydney Banker.
In something that still hasn't been reported, Nicholas Moore personally bought the magazine a couple of years ago. It was a strange move for a banker to buy control of banking magazine, especially one that had so lauded the Millionaire's Factory at its big annual awards night.
Check out the 2008 winners when Allan Moss was installed into the Hall of Fame and Macquarie was awarded "investment bank of the year". The big revenue boost for Moore's little magazine comes from Optus each year which outlays a ridiculous $300,000 to sponsors these awards.
Unfortunately for Moore, the business has been losing money and last week Peter Charlton lost control when a bloke named Andrew Stabback was installed by Moore to turn things around. Stabback runs a company called InAssociation and used to work as the sales director of Insto Magazine.
Moore is known to loathe journalists and publicity yet he owned the magazine through his company Australian Financial Publishing. It wasn't widely known that Allan Moss personally owned a big stake in Coolangatta Airport, but this investment by Nicholas Moore seems even more bizarre, perhaps even warranting a question on July 23.
Given the credit crisis and everything else going on, surely the Macquarie CEO shouldn't be distracted by side-show issues such as who should run this banking magazine he owns. Then, of course, there is the whole separate question about how Moore's trade title is covering the credit crisis, including Macquarie's own battles.
ABC Learning vs CFK and the Macquarie connection
I bought into boutique childcare company CFK after it was announced in February 2006 that Macquarie Bank would inject more than $10 million to become a strategic 30% shareholder. That was when the stock was trading at around 41c and it quickly ran up to a high of more than 60c a few weeks later.
Fast forward to 2008 and CFK appears to be in chaos.
It announced the sale of 23 childcare centres for $13 million in December last year and it appears that ABC Learning picked up several centres on Sydney's affluent northern beaches.
In the transition it came to light that CFK had been withholding the child care benefit payments and charging parents the full monty for several months prior to the handover. According to the director of one centre, thousands of parents are affected over many months.
It appears the CFK accounts were a giant dog's breakfast with so many errors in individual accounts parents could not tell what was going on.
The "settlement" between ABC and CFK is now bogged down with lawyers because CFK will not repay the money to parents but wants ABC Learning to provide credit on the accounts. Meanwhile, parents are out of pocket because they paid full price up front.
It all smells something like a cash flow problem for CFK.
In the latest update, ABC Learning has sent an email to some of the waiting parents in Sydney which includes the following:
ABC is still in court with CFK about the fees. I will update you as soon as something has happened. ABC is very sorry to all the parents that it is taking so long but CFK still won't co-operate.
And this is a business that still has the brilliant Macquarie as its largest shareholder with 25%. Why aren't they helping sort this mess out?
That said, Macquarie seems to have turned the tap off because CFK turned to Chimaera Capital for a $2.5 million convertible note issue last November. Chimaera has just been sent under by ANZ. Before that, ANZ popped up with 13% of CFK after it pulled the plug on Opes Prime.
Oh dear. What a mess! CFK closed at 8.5c today, so I've lost more than $400 on the $500 investment.
Babcock's power fee
I emailed Babcock spinner Kelly Hibbins today to ask whether the struggling Babcock & Brown Power fund would be paying its unsackable management company a fee for the $700 million sale of the Uranquinty power station to Origin Energy last week. She replied as follows:
There are external advisers fees which have been taken into account in the net proceeds including stamp duty which was a large chunk and a fee for UBS who was acting as an advisor. BNB is under the normal terms of its arrangements with BBP entitled to a fee and in particular in this case given the substantial nature of the profit and the fact the BNB was funding the development on BBP's balance sheet. However there is no fee unless the BBP degearing and value restoration programme is completed in a manner which is acceptable to the independent directors of BBP and even if there is ultimately a fee it will be at a discounted level.
Hmmm, that sounds like a fee is payable but it is discretionary. Surely these things should be hard and fast. Whatever the case, it would be outrageous for Babcock & Brown to get any sort of performance-related fee on a single asset sale when the overall performance has been so bad.
Babcock & Brown Power floated at $2.50 in December 2006. I bought 188 at $2.68 a few days after the float and tonight they closed 6.5c weaker at 71c. Maybe Babcock & Brown should be refunding some of the huge fees that have been gouged out already.
AGM records - the good, the bad and the slow
In chasing down all these old records from AGMs we've been reviewing plenty of websites and discovering that quite a number of companies trumpet the fact they have archived webcasts available but then don't actually deliver the goods.
Here is five examples:
Alumina AGM 2003 link is not working
Alumina AGM 2004 link is not working
ANZ AGM 2007 Video webcast, no sound.
Macquarie Bank 2005 AGM, video webcast, no sound.
Oxiana AGM 2007 page cannot load
On a brighter note, we recommend Oxiana 2008 for the best webcast production quality and look forward to them repeating the performance at the upcoming EGM on July 18, which should be doozy given Owen Hegarty's $10 million payout is likely to be voted down.
Transurban has joined the likes of Fortescue, Austar, Tabcorp and Austereo in reporting back that they haven't systematically kept recordings or transcripts of AGMs over the years, but spinner Andrew Head says this will change in the future.
Meanwhile, we've seen a sudden burst of traffic on this particularly hard hitting account of the 1999 Commonwealth Bank AGM which canvassed Paul Keating's piggery dealings at length, courtesy of a detailed briefing from the late Paul Lyneham. Perhaps our request for a transcript has gone to several committees before we get a response.
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.
in today's brief update we've got four stories but first, do check out this lively new video (after 6.10pm) on Insiders, Inside Business, Barrie Cassidy, Alan Kohler and some porkies from the PM, along with a case of mistaken identity.
Nicholas Moore's struggling banking magazine investment
As new Macquarie Group CEO Nicholas Moore gets ready for his first AGM presentation on July 23 at Melbourne's Crown Casino, one of his private investments is causing concern.
Sydney Liberal Party figure Peter Charlton had for a long time controlled a little business which includes trade magazine Australian Banking & Finance. I used to contribute articles to it in the early 1990s, just after the name change from Sydney Banker.
In something that still hasn't been reported, Nicholas Moore personally bought the magazine a couple of years ago. It was a strange move for a banker to buy control of banking magazine, especially one that had so lauded the Millionaire's Factory at its big annual awards night.
Check out the 2008 winners when Allan Moss was installed into the Hall of Fame and Macquarie was awarded "investment bank of the year". The big revenue boost for Moore's little magazine comes from Optus each year which outlays a ridiculous $300,000 to sponsors these awards.
Unfortunately for Moore, the business has been losing money and last week Peter Charlton lost control when a bloke named Andrew Stabback was installed by Moore to turn things around. Stabback runs a company called InAssociation and used to work as the sales director of Insto Magazine.
Moore is known to loathe journalists and publicity yet he owned the magazine through his company Australian Financial Publishing. It wasn't widely known that Allan Moss personally owned a big stake in Coolangatta Airport, but this investment by Nicholas Moore seems even more bizarre, perhaps even warranting a question on July 23.
Given the credit crisis and everything else going on, surely the Macquarie CEO shouldn't be distracted by side-show issues such as who should run this banking magazine he owns. Then, of course, there is the whole separate question about how Moore's trade title is covering the credit crisis, including Macquarie's own battles.
ABC Learning vs CFK and the Macquarie connection
I bought into boutique childcare company CFK after it was announced in February 2006 that Macquarie Bank would inject more than $10 million to become a strategic 30% shareholder. That was when the stock was trading at around 41c and it quickly ran up to a high of more than 60c a few weeks later.
Fast forward to 2008 and CFK appears to be in chaos.
It announced the sale of 23 childcare centres for $13 million in December last year and it appears that ABC Learning picked up several centres on Sydney's affluent northern beaches.
In the transition it came to light that CFK had been withholding the child care benefit payments and charging parents the full monty for several months prior to the handover. According to the director of one centre, thousands of parents are affected over many months.
It appears the CFK accounts were a giant dog's breakfast with so many errors in individual accounts parents could not tell what was going on.
The "settlement" between ABC and CFK is now bogged down with lawyers because CFK will not repay the money to parents but wants ABC Learning to provide credit on the accounts. Meanwhile, parents are out of pocket because they paid full price up front.
It all smells something like a cash flow problem for CFK.
In the latest update, ABC Learning has sent an email to some of the waiting parents in Sydney which includes the following:
ABC is still in court with CFK about the fees. I will update you as soon as something has happened. ABC is very sorry to all the parents that it is taking so long but CFK still won't co-operate.
And this is a business that still has the brilliant Macquarie as its largest shareholder with 25%. Why aren't they helping sort this mess out?
That said, Macquarie seems to have turned the tap off because CFK turned to Chimaera Capital for a $2.5 million convertible note issue last November. Chimaera has just been sent under by ANZ. Before that, ANZ popped up with 13% of CFK after it pulled the plug on Opes Prime.
Oh dear. What a mess! CFK closed at 8.5c today, so I've lost more than $400 on the $500 investment.
Babcock's power fee
I emailed Babcock spinner Kelly Hibbins today to ask whether the struggling Babcock & Brown Power fund would be paying its unsackable management company a fee for the $700 million sale of the Uranquinty power station to Origin Energy last week. She replied as follows:
There are external advisers fees which have been taken into account in the net proceeds including stamp duty which was a large chunk and a fee for UBS who was acting as an advisor. BNB is under the normal terms of its arrangements with BBP entitled to a fee and in particular in this case given the substantial nature of the profit and the fact the BNB was funding the development on BBP's balance sheet. However there is no fee unless the BBP degearing and value restoration programme is completed in a manner which is acceptable to the independent directors of BBP and even if there is ultimately a fee it will be at a discounted level.
Hmmm, that sounds like a fee is payable but it is discretionary. Surely these things should be hard and fast. Whatever the case, it would be outrageous for Babcock & Brown to get any sort of performance-related fee on a single asset sale when the overall performance has been so bad.
Babcock & Brown Power floated at $2.50 in December 2006. I bought 188 at $2.68 a few days after the float and tonight they closed 6.5c weaker at 71c. Maybe Babcock & Brown should be refunding some of the huge fees that have been gouged out already.
AGM records - the good, the bad and the slow
In chasing down all these old records from AGMs we've been reviewing plenty of websites and discovering that quite a number of companies trumpet the fact they have archived webcasts available but then don't actually deliver the goods.
Here is five examples:
Alumina AGM 2003 link is not working
Alumina AGM 2004 link is not working
ANZ AGM 2007 Video webcast, no sound.
Macquarie Bank 2005 AGM, video webcast, no sound.
Oxiana AGM 2007 page cannot load
On a brighter note, we recommend Oxiana 2008 for the best webcast production quality and look forward to them repeating the performance at the upcoming EGM on July 18, which should be doozy given Owen Hegarty's $10 million payout is likely to be voted down.
Transurban has joined the likes of Fortescue, Austar, Tabcorp and Austereo in reporting back that they haven't systematically kept recordings or transcripts of AGMs over the years, but spinner Andrew Head says this will change in the future.
Meanwhile, we've seen a sudden burst of traffic on this particularly hard hitting account of the 1999 Commonwealth Bank AGM which canvassed Paul Keating's piggery dealings at length, courtesy of a detailed briefing from the late Paul Lyneham. Perhaps our request for a transcript has gone to several committees before we get a response.
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.