Risk Metrics debate
April 27, 2010
Here is a transcript from the Seven Network EGMs to vote on the $2 billion Westrac deal held in Sydney on April 20.
Stephen Mayne: page 44 of The Financial Review today the Rear Window column has a headline “So good they said it twice”
and it goes through the fact that….
Bruce McWilliam:
inaudible
Stephen Mayne: I
don't quite follow you Bruce, but we will work it out later. The story is
about…
Bruce McWilliam: can
I interrupt you and just say we have two separate advisors advising the
companies on the deal. Why wouldn't they have talked if they did? It's not a
matter of coincidence they talked in advance before they wrote to RiskMetrics.
Stephen Mayne: but
isn't it the point that one of them is meant to be an advisor to the
independent directors? Providing you with independent advice and it looks like…
Bruce McWilliam:
Stephen..
Stephen Mayne:
Bruce, can I finish?
Bruce McWilliam: no
I'm sorry so you don't go off on a tangent, one is the advisor to Westrac, which
is the vendor, that is Goldman Sachs, the other JP Morgan is the advisor to the
company. You are not seriously suggesting if someone writes an incorrect
report, you can't write and pick them up on a few points.
Stephen Mayne:
well I just don't think it is a good look when I read this article…
Bruce McWilliam: why
isn't it a good look for us, as directors of the company, if someone writes
something incorrect about a transaction the company is undertaking? Why isn't a
good look drafted correctly when it's wrong – incorrect?
Stephen Mayne:
I'll take you up on one of your points. One of the letters apparently talks
about if this deal fails, the shares will head down towards six bucks!
Peter Ritchie: let's
end it..
Stephen Mayne:
okay?
Peter Ritchie: let's
end it there. Let's end it there. This is not adding to the discussion.
Stephen Mayne: no
no, this actually gets to the very core of it! This gets to the very core of
it. Can I actually just finish what I am saying please? One of these letters
from your independent advisors to the independent directors makes a reference
to if this deal doesn't go through, the shares are going to tank. They are
going to go down to six bucks. Which is the traditional scare tactic you use to
trying get institutions over the line on a controversial deal. Now…
Bruce McWilliam: it
does sort of match up with what the shares were before we started…
Stephen Mayne:
what I am asking you, the last time you came to reflect on the net assets of
this business, as a stand alone entity, you were pushing it up. So what's this
talk about six bucks? When you last reflected as independent directors, when
you last reflected…
Bruce McWilliam: it
wasn't our talk.
Peter Ritchie:
Stephen, what's your question?
Stephen Mayne: I'm
concerned that the independent directors have been overly influenced by the
controlling shareholder and their advisors, and you have not negotiated hard
enough, and in the final sequence, your advisors have actually come to
parroting the advice given to the conflicted controlling shareholder. So you've
gone through this whole thing saying Kerry can't be here today because he has a
conflict, and we've got to be independent, and then you've got your advisor
sending off letters seemingly drafted by Kerry's advisor to the proxy advisors,
who are the kingmakers in this deal!
Peter Ritchie: we
have noted your concern, thank you.
Bruce McWilliam: and
Stephen, just for the record, Grant Samuel were the independent advisors, they
didn't write to RiskMetrics, they were advising the independent directors, I
have told you what two firms did write to them, and do think that poor little
Risk Metrics is so fragile it can't receive a letter saying they were wrong on
these points. Have to disagree, sorry.
Stephen Mayne: I
think the meeting should be told where they're wrong. There has been a big
hullabaloo about this, I don't know the detail of where they're wrong, so I
would be interested in you telling us the details.
Bruce McWilliam: one
thing where they were wrong was that they totally mis-stated the effect of the
deed poll, which was negotiated on behalf of Perennial and Ausbil Dexia, the
second and third biggest shareholders. RiskMetrics, right, in their report,
ignore the fact the clause in there is held on trust, not for ACE, for non-ACE
shareholders - totally mis-stated and incorrect. Then they say what if the
independent directors won't enforce the deed, that's put forward as a serious
point. It is a kindergarten point, but the directors have to act in the best
interests of the company, and it's spelt out, it would be a breach of trust
then, not to act for the benefit of those shareholders. In your submission, we
shouldn't have written and said you're sorry you're wrong on that point?
Peter Ritchie: we
have had a couple of contrary view points, and that's part of the democratic
process, everybody has had that information and we will see how the vote turns
out.
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