Allco AGM, Swan's dump, ABC Learning and AMP
February 2, 2010
Dear Mayne Reporters,
It's all happening today. As the world readies for Barack Obama's victory, Treasurer Wayne Swan has dumped some bad news, revealing the projected 2008-09 surplus will only be $5 billion, rather than the promised $21 billion. Oh dear - that $10.4 billion welfare splurge next month is looking more and more reckless by the day. What cash will be left to bail out NSW, the securitisation market, the banking system and the billions in frozen funds if that is what the doctor orders?
However, equity markets have continued to recover even as the individual corporate news gets progressively worse. AMP this morning opportunistically placed $450 million worth of shares at the knockdown price of $5.30 a pop. With the stock down 9c to $5.89, us small shareholders have every right to demand a share purchase plan on exactly the same terms as the big boys.
The ABC Learning announcement still hasn't arrived but we were able to crawl all over the Allco Finance Group situation when its CEO David Clarke presented himself for re-election at the Allco Equity Partners AGM this morning.
I've seen some strange AGMs in my time, but AEP opened proceedings this morning by terminating its management agreement with AFG before declaring it wants to hire the six AFG fund managers in house, change the name, move office and soldier on as if nothing happened.
AFG's Rob Moran was paid $1 million in cash last year by the company and will presumably want to retain a similar gig when working directly for AEP.
The first shareholder to speak was Bob Wilden and he passionately called for AEP to be liquidated. After all, the stock trades below $2 but the directors and auditors reckon its $100 million in cash and three investments are worth $5.58 a share.
I supported this call but first teased out the mechanics of the separation.
For instance, AEP and AFG have the same auditor, Chris Whittington from KPMG. He presumably will be sacked by AEP and caught up in endless litigation over the AFG collapse. I got him up to defend the book values of AEP's investments in the unlisted Baycorp and Signature Security and he produced the usual guff about accounting standards.
The re-election of David Clarke produced an interesting debate because he wasn't paid by AEP given he represented the manager. Clarke said that he expected to be turfed by the AFG receiver shortly and would then just become a regular non-executive director of AEP. Independent, and all that jazz.
Whilst it doesn't make sense for AEP to dump all its investments in this market, it could distribute 80c a share in cash, along with the stake it holds in the listed IT concern IBA Health.
Alas, this board and management team seem determined to keep creaming off their fees.
The collapse of Allco also triggers a very interesting show down between the receiver and Melbourne's billionaire Liberman family.
AFG did a put and call arrangement with the Liberman's to buy their 20% stake in AEP at $5 a share. That payment of more than $100 million is now due. The banks presumably won't pay up the Libermans will just be another creditor.
Oh dear, this is going to get messy.
Gotta fly as the Babcock & Brown Infrastructure AGM awaits but there'll be more later.
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.
It's all happening today. As the world readies for Barack Obama's victory, Treasurer Wayne Swan has dumped some bad news, revealing the projected 2008-09 surplus will only be $5 billion, rather than the promised $21 billion. Oh dear - that $10.4 billion welfare splurge next month is looking more and more reckless by the day. What cash will be left to bail out NSW, the securitisation market, the banking system and the billions in frozen funds if that is what the doctor orders?
However, equity markets have continued to recover even as the individual corporate news gets progressively worse. AMP this morning opportunistically placed $450 million worth of shares at the knockdown price of $5.30 a pop. With the stock down 9c to $5.89, us small shareholders have every right to demand a share purchase plan on exactly the same terms as the big boys.
The ABC Learning announcement still hasn't arrived but we were able to crawl all over the Allco Finance Group situation when its CEO David Clarke presented himself for re-election at the Allco Equity Partners AGM this morning.
I've seen some strange AGMs in my time, but AEP opened proceedings this morning by terminating its management agreement with AFG before declaring it wants to hire the six AFG fund managers in house, change the name, move office and soldier on as if nothing happened.
AFG's Rob Moran was paid $1 million in cash last year by the company and will presumably want to retain a similar gig when working directly for AEP.
The first shareholder to speak was Bob Wilden and he passionately called for AEP to be liquidated. After all, the stock trades below $2 but the directors and auditors reckon its $100 million in cash and three investments are worth $5.58 a share.
I supported this call but first teased out the mechanics of the separation.
For instance, AEP and AFG have the same auditor, Chris Whittington from KPMG. He presumably will be sacked by AEP and caught up in endless litigation over the AFG collapse. I got him up to defend the book values of AEP's investments in the unlisted Baycorp and Signature Security and he produced the usual guff about accounting standards.
The re-election of David Clarke produced an interesting debate because he wasn't paid by AEP given he represented the manager. Clarke said that he expected to be turfed by the AFG receiver shortly and would then just become a regular non-executive director of AEP. Independent, and all that jazz.
Whilst it doesn't make sense for AEP to dump all its investments in this market, it could distribute 80c a share in cash, along with the stake it holds in the listed IT concern IBA Health.
Alas, this board and management team seem determined to keep creaming off their fees.
The collapse of Allco also triggers a very interesting show down between the receiver and Melbourne's billionaire Liberman family.
AFG did a put and call arrangement with the Liberman's to buy their 20% stake in AEP at $5 a share. That payment of more than $100 million is now due. The banks presumably won't pay up the Libermans will just be another creditor.
Oh dear, this is going to get messy.
Gotta fly as the Babcock & Brown Infrastructure AGM awaits but there'll be more later.
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.