Transcript of Promina takeover EGM in 2007
July 9, 2008
Here is an edited transcript of our exchanges at the 2007 Promina EGM.
Stephen Mayne: Morning chairman, I'm a small shareholder in both Promina and …
Chairman Leo Tutt: So I shouldn't say crikey at this stage. Okay.
Stephen Mayne: And Suncorp I was going to say. Just a couple of questions. Are you going to advise the meeting of the proxy situation before we go to the poll?
Leo Tutt: Judith. Yes, we are.
Stephen Mayne: Alright, okay. And will that include the information on the number of undirected proxies that you hold?
Leo Tutt: It will.
Stephen Mayne: Right. Okay. I've got four or five issues I'd like to go through in the any absence of anyone else speaking. It'll probably take five or ten minutes at most.
Leo Tutt: Well, if you don't mind. I'll go back and we'll answer them from my seat.
Stephen Mayne: Yeah, fine. First one's just, I think there was a story in the front page of the Australian's Business section today claiming that we're facing some sort of Kiwi fruit to calamity was the expression that they used which sounded like a bit of a beat up but basically putting the proposition that there's an unprecedented loss of Kiwi fruit in New Zealand to a $100 M kiwi. We've taken a $5 M hit in our last results but there's big losses to come, if you believe the paper. Given this information's been put into the market place … sorry about that, could you update us about the scale of this Kiwi calamity that we are facing?
Leo Tutt: Yes, you're referring to the Australian this morning. Mike, you'd like to answer that. Yes, we think it's a beat up but there we are.
CEO Mike Wilkins: Thank you Chairman, yes there's an article in the Australian today that talked about revenue losses for the kiwi fruit industry in New Zealand of between $70 and $100 M kiwi dollars. They're revenue losses to start with, it's also reported that we had some of the insurance coverage for that marketing authority. The journalist failed to speak to us about any of that. The journalist failed to take into account the very prudent reinsurance arrangements that are in place that limit our losses to somewhere between $5 and $10 M on any event of that type. So, it looks to me like a story that was looking for some place to go and unfortunately he didn't come and ask before it was actually written, so I wouldn't worry too much about it.
Stephen Mayne: Okay, that's reassuring, thank you. Question for you Chair, in 2003 you were the chairman of MIM who recommended the sale of a company to Strata against the advice of your own CIO which turned out to be the buy of the century for Strata, are you more confident in recommending this transaction to shareholders than you were at the time you recommended the MIM sale in 2003?
Leo Tutt: Oh, thanks. I was wondering when that one was going to come up. But on this occasion I've actually got my managing director on side and I feel very confident that we're doing the right thing. I think we did the right thing last time too but there we go.
Stephen Mayne: Perhaps one for Mike. The synergies or the integration costs of $355 M are pretty large by, when compared with other mergers of this size and the claimed savings of $255 M are also pretty large. Can you give us more of an insight as to where that's going to come from. I mean obviously the head office in Sydney pretty much gets scaled right back, but in terms of employee numbers and just the scale of it, these are big numbers and everyone agrees there's execution risk. You're leaving, you're looking at it independently and probably has as good an insight as anyone, so can you give us some more insight …
Leo Tutt: I think those figures you'll find where Suncorp Metway's figures. We didn't believe that they were totally out of court and that's all I'm prepared to say on that matter.
Stephen Mayne: Not totally out of court but a little bit out of court?
Leo Tutt: I've answered your question.
Stephen Mayne: Okay, now there was some discussion about installing Mike as the CEO of the combined operation in a similar situation to what happened with ASXXB and Tats Unitab. That didn't eventuate, personally I think it would have been a good result. Mike's done a fantastic job with Promina. I'm curious as to why that didn't happen. Did Mike have a problem with moving to Brisbane or was it a case of you just stared down Perpetual, the larger shareholder in both of our companies and said that on this occasion they wouldn't get their way? Because I thought it seemed like a logical thing to happen.
Leo Tutt: We didn't stare down anybody and it was never an option put to my board.
Stephen Mayne: So were did that speculation come from? It was just a beat up was it?
Leo Tutt: Well, I think you know more about speculation than anybody sitting in this room. So, we'll leave it at that.
Stephen Mayne: And just one last one. How did we determine which of our directors would represent our shareholders on the combined board. I noticed that Anna Heines and Alan Diplock are the two that appear to have missed out. What was that process? And I know that we have a good deal of head room in our board feeds for '06, '07, given that we're closing off the business in a couple of weeks time, has anything been done in terms of the director's fees for the two departing directors?
I think it probably would be quite appropriate when John hands out the pink slips after the meeting today, people who aren't continuing will receive compensation, that's obviously a fair whack of the 350,500 million in integration costs. Has anything been done for the two directors who won't be continuing on the combined board?
Leo Tutt: Well, the only thing that's being done is we're giving both of them a nice little gift after this but it doesn't amount to a row of beans in terms of dollars and cents. The board of Promina as you know gets paid a fee. They get no termination fees whatsoever.
Stephen Mayne: Okay, thank you.
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