February 2, 2010
Dear Mayne Reporters,
The coming AGM season will be the most dramatic in a long while and today's edition reveals the first planned board tilt. It's a big struggling name, too.
And whilst it has taken a while to refine we're finally happy with this latest version of our "dead parrot" video, taking a Monty Python perspective on Nicholas Moore defiant performance at Wednesday's Macquarie Group AGM.
The video has been getting quite a few votes on news rating site www.kwoff.com, so check it out. It even delivered our biggest ever video traffic day yesterday as the overall site had its second biggest day since we launched last November.
Also, click through for the full edition to see the video we've put together from the Macquarie AGM of Nicholas Moore explaining how he can own a banking magazine that keeps gonging Macquarie.
The edition also includes a comprehensive analysis of Kerry Stokes' latest WA News raid, with some advice on how he could comfortably secure 100% board control early next year by driving constitutional reform at this year's AGM.
There's also a story on the bunker mentallity of Oxiana turned OZ Minerals chairman Barry Cusack who like most Rio Tinto alumni, refuses to engage, unlike the leadership team at GPT.
We've done the usual Full Monty with our share trading and you won't believe who has signed up as our Facebook friends over the past 24 hours.
Click through to enjoy plenty of interesting watching, listening and reading experiences in the full edition.
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.
Macquarie Group CEO Nicholas Moore could be lauded by his own banking magazine if re-elected, but so far he has declined to put himself to the vote. Check out all the Australian Banking and Finance references on this video from the Macquarie AGM.
The wonderful wife, Paula Piccinini, has today picked up $500 worth of shares in Centro Retail at 30c a pop as we get ready for a board tilt at this year's October AGM.
Centro Retail should never have had an identical board to its parent company Centro Properties Group and despite chairman Brian Healey and CEO Andrew Scott being shown the door, new independent directors have not yet been found.
The big proxy advisers have been calling on Centro Retail to have some independent directors for years so if Centro won't do it themselves, it is my solemn duty to offer an alternative at this year's AGM. Paula will be the nominating shareholder.
Graham Goldie and Jim Hall, two of the directors up for election at last year's Centro Retail AGM, both joined that very small club of endorsed candidates who got less than 90% of the vote in favour, although the against vote of 10.8% wasn't exactly huge.
In 2006, Sam Kavourakis and Peter Wilkinson were even less popular as the against vote hit 13.1%.
New chairman Paul Cooper is the only certainty to be up for re-election, although one of Kavourakis or Wilkinson will probably be in the frame as well. It will be interesting to see if my tilt expedites the hunt for new directors before the AGM and whether they employ the "no vacancy" rort against a challenger.
The substantial shareholders above the 5% disclosure theshhold at the moment are CommBank, ING, Barclays and Orbis Global Equity. We'll be approaching them all presenting the argument that Centro Retail needs some independent directors. The concept is fine, but no doubt they'll have queries about the qualifications of the candidate.
Billionaire media mogul Kerry Stokes is creeping up on WA News, spending $50 million buying another 3% of the badly run company as he prepares to take control over the coming year.
This recent Crikey story asked why Stokes wasn't creeping up on his target and it turns out that he was because you only have to inform the market of a change of shareholding when it increased or decreased by more than 1 percentage point.
However, lifting Seven's stake in WAN to 22.4% won't be enough to deliver Stokes the coveted chairmanship of WAN given these results at the EGM in April:
Kerry Stokes: for 57.25m, against 86.15 million (net deficit 28.9m shares)
Chairman Peter Mansell: for 77.37m, against 66.06m (net surplus 11.31m)
The institutions opposed Stokes because they want Seven to pay a premium for control and he is now doing precisely that, albeit on a selective basis. Before the market opened yesterday, Stokes did a deal with the largest institutional shareholder Barclays and a couple of others to snap up 4 million shares at $10.25 a pop.
This was a hefty 13.6% premium to the previous closing price of $9.02. The wife and I each own 35 shares in WA News and would have appreciated being offered a similar premium. Alas, Kerry has obviously lost my number after that aggressive phone call the day after the EGM. We're looking forward to raising all of these issues at the Seven Network AGM later this year, if not the annual results briefing on August 5.
Barclays and friends are being financially rewarded for their intransigence but will also not ever be able to sell their entire stakes this way because Stokes is now much closer to securing control.
If Stokes wants to expedite control he should knock out the no vacancy rort at the forthcoming AGM by proposing a constitutional change that eliminates the board's ability to say "sorry chaps, the maximum board size is four".
Unless some sort of compromise is reached, that is precisely what the WAN board will do again at this year's AGM, meaning that there will only be one vacancy. If Stokes wanted to get him and lieutenant Peter Gammell on the board, it would be impossible because there would be three candidates for one spot and Stokes would find himself competing against his running mate, a contest he would probably lose if the April results are any guide.
Therefore, Stokes could just knock out the no vacancy rort at the AGM and then call another EGM for February next year after his next 3% creep lifts Seven's stake to more than 25%.
Once again, he would have to pay institutions a premium for this stake but it would probably be enough, especially given the on-going woeful performance of the board, led by chairman Peter Mansell.
I was chatting to a Freehills partner on Wednesday night who said that Peter is not that tough, which probably explains why he has refused to force the departure of cavalier editor Paul Armstrong, who seems to run the whole company and not very well.
Stokes will sack Armstrong and turn around performance and the institutions won't put up with this "do nothing" approach from the board, which still hasn't fulfilled its promise to add another independent director with media experience.
Rio Tinto has long produced executives who have a bunker mentallity and don't like to engage and so it is with Oxiana turned OZ Minerals chairman Barry Cusack, who spent more than a decade with the mining giant, including a stint fighting greenies as chairman of uranium miner Energy Resources of Australia.
Property giant GPT copped plenty of stick in this video, but that didn't stop the chairman and CEO making contact and arranging a meeting to discuss some of the issues raised.
Contrast that with Oxiana which hasn't yet replied to this email sent to its assorted spinners and company secretaries:
Hi everyone, not sure who to direct this one at but I'm interested in the question of financial adviser success fees on the Oxiana/Zinifex merger.
The deal was valued at $12 billion in the original announcement but the combined market capitalisation is now $6.4 billion. Usually these fees have an element based on the value of the transaction, so it becomes quite an important question as to when the transaction was valued for this purpose.
OZ Minerals CEO Andrew Michelmore made the comment at last Friday's EGM that the total costs of the merger were less than $100 million.
Obviously I'd be interested in as much detail as possible on how much Morgan Stanley and Gryphon were paid for advising Oxiana and how much UBS and Lazard Carnegie Wylie were paid to advise Zinifex.
However, if specific details are not available, just a date on when the valuation component would be great. Am assuming it would probably be when the court approved the scheme and it became effective.
Cheers, stephen mayne
Three days later and the silence is deafening. The cost of takeovers is pretty outrageous in Australia and disclosure of the overall fees is getting worse. For instance, we're told that Wesfarmers spent $600 million buying Coles but there has never been any breakdown on this figure.
We're going to start a new list tracking takeover costs so please send any tips through. If the BHP-Billiton bid for Rio Tinto succeeds, the costs of the deal will presumably run into the billions.
Despite getting wiped out in stocks such as Bill Express, I've played the dead cat bounce in property stocks quite well when you consider these recent trades:
Mirvac: bought 1500 at $1.90 on July 15, sold 1300 at $2.47 on July 18. Net profit: $700.
Macquarie Infrastructure Group: bought 1500 at $2.01 on July 10, sold 1500 at $2.37 on July 21. Net profit: $500.
GPT: bought 2000 at $1.60 on July 10, sold 2000 at $1.82 on July 24. Net profit: $400
Still, a quick trading profit of $1600 on three stocks isn't pacifying the missus as she digests Mayne Report Pty Ltd's $185,000 loss in 2007-08. I keep telling her to view it as an investment, not a loss, and she keeps telling me to drum up some more paying subscribers.
We've also taken quite a hiding in the boarder market. Click here to see the full list of 720-plus stocks as of July 21, 2008, including current market values and the paper profit or loss on individual investments. Remember that we crystallise profits and hang on to losses, so the residual red ink in the portfolio doesn't represent the full picture, ugly as it seems.
Following a cracking day at the Macquarie AGM and some prominent links in this Crikey story, we had our second biggest day for traffic ever yesterday with nearly 2500 visits and close to 4000 page views.
These key audio exchanges about the Macquarie Model together had more than 1500 downloads yesterday:
1: How much are the investments in all the listed funds under water?
2: C'mon, don't be evasive, give us some specific numbers on the likelihood of big write-downs.
3: Go ahead and prove these claimed valuations by selling Sydney Airport for more than $12 billion.
4: Time to ditch Bermuda, clean up governance and internalise the management of MIG and MAP? This parrot is dead?
And our dead parrot video on the Macquarie AGM was also our most popular of recent times, such that the big three now sit as follows with a combined 10,000 views:
1. Macquarie Model a dead parrot
2. Game over at Babcock & Brown
3.Time to get Glenn Milne off the ABC
Our facebook network is growing although I just don't believe the friend acquisitions over the past 24 hours could possibly include the real Rolf Harris, Maxine Mckew, Johnny Young, Jennifer Hansen and Gretel Killeen. Someone is having a lend. Still, join me on the facebook network so you can be kept up-to-date with all the goings-on regarding The Mayne Report.
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.
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