Allstate on Macquarie, Herlad Sun stitch-up and round 4 with Lowy
July 22, 2008
Here are Stephen Mayne's three stories from the Crikey edition on Tuesday, 2 May, 2006.
2. What the Allstate directors said when Macquarie pulled the plug
By Stephen Mayne
Is anyone else still trying to work out why Macquarie Bank appears so paranoid on this question of their influence over Tasmania's Beaconsfield Gold Mine? When the Millionaire Factory pulled the plug on mine operator and controlling shareholder Allstate Exploration in June 2001, the outgoing directors were required to fill in a detailed questionnaire as part of one of the administrator's reports to creditors. Have a read of all their answers here.
Questions 48 and 49 were: When did you first realise that the company might have to go into administration? What caused you to realise this?
The managing director at the time, Patrick Scott, provided the following written answer: "I was advised by Mike Jeffries (another director) that he had been informed by Macquarie Bank that MBL were only prepared to provide further support to Allstate if the directors agreed to appoint Michael Ryan of Taylor Woodings as an administrator to manage the affairs of the company."
And that's exactly what happened. Macquarie nominated Michael Ryan. So how does that tally with Macquarie's requested Crikey apology from Clayton Utz that included the following?
- Macquarie did not appoint the administrator of Allstate
- Macquarie does not sit on the joint venture committee and has no role in relation to the control or management of the Mine
Then you have question 60: What do you consider were the causes of the failure of the company? Patrick Quinn is very frank about Macquarie's role once again:
The subsequent withdrawal of support by Macquarie Bank, Allstate's bankers and only secured creditor. MBL had agreed in October 2000 to lend additional money to Allstate to finance Allstate's share of the rectification works on the plant. This additional facility was made on condition that Otter (Allstate's largest shareholder) support Allstate's share of the operating costs of the Beaconsfield Mine Joint Venture, and that Allstate substantially re-arrange its gold forward book and principle finance facility to MBL's advantage. In hindsight, the terms of this additional facility proved too onerous, both in terms of of the cost of the additional facility and timing of the repayment schedule. It is my understanding that MBL regarded its credit risk to Allstate as part of an overall exposure to the Otter Gold Mine Group. MBL is Otter's banker and has a significant gold hedging arrangement (unsecured) with Otter. As such, MBL was always in a position to exert significant pressure on both companies.Doesn't all of this stack up to substantial influence? I'd be very surprised if Macquarie didn't have to approve some of the expenditure required to perform the current miracle saving those two trapped miners at Beaconsfield. If so, they deserve heaps of credit for adopting a "whatever it takes" approach for all the right reasons.
20. How Crikey contributed to Media Watch's Herald Sun stitch-up
By Stephen Mayne, banned for six years by the Herald Sun
It has taken ten years, but Media Watch finally exposed the quite outrageous corporate and editorial thuggery by News Ltd's biggest selling paper, the Herald Sun, to a national audience last night.
In the interests of transparency I should confess to contacting Media Watch a month ago and suggesting they pursue this story, although the producer was already interested in the original item on The Footy Show and didn't mention a number of other pathetic Herald Sun bans that have come and gone over the years.
As someone who is considering making a serious tilt at state Parliament later this year, the Herald Sun ban is an impediment because there isn't a newspaper in the world which reaches 40% of households in its circulation area.
Unfortunately, editor-in-chief Peter Blunden is one of those classic Murdoch bullies who happily abuses his market power and cuts corners to ram home his commercial dominance and punish those who don't toe the line – and no one does that more than his former business editor. The Age has for years just sat back and copped it without ever properly fighting back – although things might be about to change.
In these circumstances, the only language Blunden understands is equally aggressive tactics, direction from the Murdoch family, falling circulation and the decrees of law enforcers – all of which should flow to some extent from the damaging Media Watch expose. In my opinion, Blunden and the broader Herald Sun has a serious case of abuse of market power to answer and it revolves around the law that you should not induce a party to break a contract.
Former Carlton President Ian Collins broke his silence on the saga in no uncertain terms last night when he told Media Watch about the paper's reaction to the sponsorship deal which saw Carlton members get The Age four days a week for just $25 extra a year:
The Herald Sun expressed disappointment and anger…there were series of calls backwards and forwards…(They were) wild and irate (with) smoke coming out of their ears.Contrast that with Blunden's laughable claim that "we have an excellent relationship with the Carlton Football Club, and long may that continue." Indeed, it only become "excellent" after the board acceded to threats about more dreadful editorial coverage and dumped The Age deal.
If ACCC chairman Graeme Samuel doesn't take an interest in that then he's not doing his job – although even he would be mindful of an avalanche of negative News Ltd publicity that would almost certainly follow any regulatory intervention.
It would never have come to this if Bob Hawke and Paul Keating had blocked News Corp's takeover of the Herald & Weekly Times in 1987-88, creating an empire with almost 70% newspaper market share and enormous power.
Sadly, that power is too often abused and exploited - something which our federal politicians should think long and hard about as they contemplate introducing laws that would allow Delaware-based News Corp to add Channel Seven, Pacific Publications and 3AW to its existing newspaper and pay-TV interests.
25. So much for round four with Frank Lowy
By Stephen Mayne, pathetically disorganised shareholder activist
There have been countless examples over the years of hopeless disorganisation leading to missed AGMs and bungled proxies, so it should really come as no surprise to hear that at 4.35pm last night I discovered Frank Lowy's Westfield Group was not in the 100-share portfolio.
Here I was all excited about having the first AGM showdown with Frank Lowy since 2000 and now it's going to have to wait another year. Reserve Bank conflicts, the sweetheart deal with GPT and how much of Frank's $14 million a year salary is being paid for his soccer work were just some of the questions that now won't be asked.
The only saving grace in leaving the floor to Crazy Jack Tilburn when the Westfield AGM kicks off at the Westin from 10am is that, now, an opportunity has opened up to attend the Aristocrat Leisure AGM from 10.30am at Star City Casino. However, the anti-gambling sprays will have to be fairly brief to facilitate a quick dash down to the Four Seasons Hotel in George Street for some media ownership discussion with APN News & Media.
There's no doubt that 2 May is definitely the busiest day of the 2006 mini-AGM season for the approximately 250 listed companies with 31 December balance dates. There will also certainly be some interesting post-lunch action when SFE Corp holds its last AGM before the merger with those fellow monopolists from the ASX. Observers who read this in time can drop by the Shangri-la at The Rocks from 2.30pm for all the action. The recent report from the respected Peter Doherty of Capital Partners suggesting SFE Corp is being sold too cheaply will no doubt get an airing.
The Rio Tinto-controlled Coal & Allied is also holding its AGM from 11am in Sydney tomorrow, so that makes five top 100 companies all gathering on the one day. Who needs to be on the Westfield register with this smorgasbord to choose from?
We'll have reports on all the action in tomorrow's Crikey, but Victorians can tune in to ABC 774 from 5.40pm for the regular Tuesday spot with Lindy Burns for an early taste.
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