Transcript from Transfield Service 2009 AGM

September 3, 2010

Here is a partial transcript from the 2009 Transfield Services AGM when we took it to the board over unfair capital raising structures and belatedly prompted a share purchase plan for retail investors almost a year later.

Stephen Mayne: Firstly, all shareholders are delighted the way the stock has recovered since we conducted, what did look like an emergency capital raising where we more than doubled our shares on issue at a very discounted price. Just a couple of questions around the structure of that. The first one is: why wasn't the capital raising underwritten? We've seen most other companies in this situation have an underwritten raising. What was different about our situation?

Chairman Tony Shepherd: thank you Stephen and good morning. It's always good to see you at a meeting. Look at the time we would have loved to have it underwritten, but frankly, true underwriters had quit the market. It was, as you would recall at the time, it was a serious downturn in the world economy – a couple of markets had frozen and there weren't true underwriters available.

Stephen Mayne: seeing as you were so desperate for capital, why didn't you structure the offer so that us retail investors could apply for overs? In the majority of situations like your one, where you have an entitlement issue, where there is a shortfall because you haven't made it renounceable. So retail shareholders or any shareholders – from the controlling family to the smallest shareholder, can't renounce, then if you want to raise extra money, you give shareholders a chance to buy overs. So why didn't you do that?

Chairman Shepherd: it's a fair question. Again, if we go back to the situation at the time, the first thing we wanted in this raising was certainty. So we went for a placement and a rights issue, we needed to ensure we got the amount of capital we required. But recognising that it was a deep discount, a very deep discount, we didn't want to raise more equity than we required to fix the problem. So we set in our mind how much equity we needed to raise as a minimum to fix the problem, and we didn't want to over-raise. I guess the subsequent events have shown, that by the 30^th of June 2009, our balance sheet is in good strong shape. So really we were driven there by ensuring that we got enough equity to fix the problem, but didn't over-raise and dilute even further.

Stephen Mayne: I would argue that you have panicked in this situation, because if you didn't want to raise too much capital, why on earth would you do a selective institutional placement with the big-end of town, rather than allowing your existing retail base, or all shareholders, to contribute the full amount of pro-rata capital? The net effect of what has happened here is you've heavily diluted the retail investors by doing, as you've already admitted, a heavily discounted selective institutional placement, and then you've shut the door on us, from even being able to take up the full amount of offering to retail as a class.

So as a class, retail have been heavily diluted by the lack of overs, and by the discounted selective institutional placement, and I will put to you, that you owe your retail investors a share purchase plan.

We have been selectively and heavily diluted, and you can do it under the listing rules of the 20% discount and other companies like Boart Longyear and Asciano have, in similar situations, offered an olive branch to retail by coming through after the emergency raising with an SPP, and I cannot see the argument why you wouldn't follow that exact course of action.

Chairman Shepherd: Let me deal with these in order. The board didn't panic, but if you recall the events, 20-20 hindsight is always a luxurious and wonderful thing. This was the start, or the middle patch even, of the biggest collapse in world equity and debt markets since the Great Depression. So it wasn't a question of how do we fine tune this to get the best result for everybody, or can we defer this for 6 months until the market recovers, its let's take the action now.

Let's not gamble the company. We had no idea whether the downturn was going to get worse. We had no idea where the world economy was heading. But we certainly weren't going to gamble the future of the company for the sake of avoiding what we had to do immediately.

Now in terms of our future capital management, I take your point about whether we need to raise additional equity and whether we should have a share purchase plan, we'll take that on board, we'll take that into consideration as we go forward. But, at the time, we did what had to prudently and sensibly be done. Unpopular as it was, to ensure that your company remains stable, strong and secure going forward.

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Transcript from Transfield Service 2009 AGM

September 3, 2010

Here is a partial transcript from the 2009 Transfield Services AGM when we took it to the board over unfair capital raising structures and belatedly prompted a share purchase plan for retail investors almost a year later.