Mayne Report: Macquarie's dubious trading
January 22, 2009
This week's subscriber edition of The Mayne Report went out at 3.10am this morning and included stories on the following topics:
Aussie Big Four banks now rank in American top 10
Bendigo holding up best in the storm
Could BHP-Billiton be headed for losses?
Naming the five companies trading at discounts exceeding $3 billion
Chasing down Phil Green's $7m Babcock loan
All the latest share trading and SPP action
Rio sees the light on AGM records? Will Seven's Kerry Stokes follow?
Substantial updates to Mayne Report Rich List
Listen to lively discussion with 774 ABC Melbourne's Libby Gore from the Aussie Open
However, the one which ruffled Macquarie's feathers is freely available for non-subscribers below:
Was there Macquarie inside dealing on struggling property fund?
Another company trading at a huge discount to book value is Macquarie Office, which owns 43 office towers around the world and claims to be worth $3.1 billion.
Alas, the current market capitalisation of $750 million suggests that a very big write-down is coming, especially given the board is presently trying to complete a massively discounted $408 million one-for-one rights issue at 20c to pay down excessive debt.
On December 5, Macquarie Group released this substantial shareholder notice revealing that it had cut its stake in Macquarie Office from 207.7 million shares or 10.15%, to 186.5 million shares or 9.13%.
The stock hit 20c yesterday and Macquarie is committing to pump another $100 million into the company at 20c as the underwriter of a capital raising that was announced on December 12 following a trading halt on December 9, just 6 days after the last sales by Macquarie.
This looked like a prima facie case of insider trading, so the following email was dispatched to the Macquarie spinners:
I'm a unitholder in Macquarie Office who has applied for additional units in the raising but also have a journalistic inquiry for a Mayne Report story I'm doing. How could Macquarie be a net seller of 21.5 million MOF units between October 21 and December 3 at prices ranging between 27c and 68c when we suddenly got an emergency $100m placement at 20c and a one for one raising at 20c announced on December 12 after the stock went into a trading halt on December 9.
Also, I note the some of the heaviest selling was in early December. How did the Chinese walls work on this one and why was the trading window open at all? I would have thought there should be no trading by any Macquarie entity in the lead up to such a substantial announcement.
This reply came back yesterday from Macquarie spinner Kerrie Lavey:
Macquarie Group lodged a Notice of change of interests of substantial holder on 3 December indicating that it had reduced its interest from 10.16% to 9.13% representing a sale of 21.2m units between October 21 and 3 December. None of this trading relates to the Group's principal holding. It relates to trading of units held on behalf of external clients by Macquarie Investment Management Limited (Macquarie Funds Group) and trading by Macquarie Securities in the ordinary course of business. These trading decisions are independent and there are effective Chinese walls between each of these groups with the result that those who authorised this trading would not have been in possession of non-public information regarding MOF's capital raising or other future plans.
Okay, Chinese Walls and all that, it is still not a good look for any arm of Macquarie to be ditching stock shortly before a deeply discounted rights issue. Given that the Rudd Labor Government has done diddly squat about improving corporate governance rules, it would be too much to expect the corporate plod would even make a few casual inquiries about this one. Ironically, ASIC is the second largest tenant in MOF's signature asset, No1 Martin Place, which doubles as the Millionaire Factory's global head office. ASIC is well placed to drop by to inspect these Chinese walls.
Whatever the trading situation, let's hope Macquarie Office recovers because I've applied for an additional $10,000 worth of units at 20c. This was done when the stock was 25c and before they extended the rights issue for a week and marginally reduced Macquarie's underwriting commitment. It is really annoying when issuers change the rules and Macquarie should have better detailed the exact nature of the underwriting in the initial offer documents.
Meanwhile, check out the substantial shareholder notice filed by Japanese investment giant Mitsui Life on January 15. Whilst Mitsui had been buying Macquarie Office stock gradually at much higher prices last year, it took a whopping 120 million units at 20c in the placement late last year.
Simon Jones, the former Macquarie Office chairman clearly shares Mitsui's view based on this recent email exchange:
Hi Simon, I know you've resigned as chairman but am interested to know whether you've taken up your entitlement to the Macquarie Office 20c rights issue, or whether you've applied for additional shares.
The register is a public document so could always search it but would appreciate a direct reply if that's not too much to ask.
Regards, Stephen Mayne
Macquarie Office unitholder
Reply from Simon Jones
Stephen, taken up my rights and applied for extra units as it represents an attractive deal to me.
Regards
Simon Jones
Executive Director
Macquarie Real Estate Capital
* If you'd like to read all our weekly editions, why not sign up for a free trial or take up our special $99 subscription offer which lasts until June 30, 2009. Alternatively, if you've had enough, click here to unsubscribe from this email list.
Aussie Big Four banks now rank in American top 10
Bendigo holding up best in the storm
Could BHP-Billiton be headed for losses?
Naming the five companies trading at discounts exceeding $3 billion
Chasing down Phil Green's $7m Babcock loan
All the latest share trading and SPP action
Rio sees the light on AGM records? Will Seven's Kerry Stokes follow?
Substantial updates to Mayne Report Rich List
Listen to lively discussion with 774 ABC Melbourne's Libby Gore from the Aussie Open
However, the one which ruffled Macquarie's feathers is freely available for non-subscribers below:
Was there Macquarie inside dealing on struggling property fund?
Another company trading at a huge discount to book value is Macquarie Office, which owns 43 office towers around the world and claims to be worth $3.1 billion.
Alas, the current market capitalisation of $750 million suggests that a very big write-down is coming, especially given the board is presently trying to complete a massively discounted $408 million one-for-one rights issue at 20c to pay down excessive debt.
On December 5, Macquarie Group released this substantial shareholder notice revealing that it had cut its stake in Macquarie Office from 207.7 million shares or 10.15%, to 186.5 million shares or 9.13%.
The stock hit 20c yesterday and Macquarie is committing to pump another $100 million into the company at 20c as the underwriter of a capital raising that was announced on December 12 following a trading halt on December 9, just 6 days after the last sales by Macquarie.
This looked like a prima facie case of insider trading, so the following email was dispatched to the Macquarie spinners:
I'm a unitholder in Macquarie Office who has applied for additional units in the raising but also have a journalistic inquiry for a Mayne Report story I'm doing. How could Macquarie be a net seller of 21.5 million MOF units between October 21 and December 3 at prices ranging between 27c and 68c when we suddenly got an emergency $100m placement at 20c and a one for one raising at 20c announced on December 12 after the stock went into a trading halt on December 9.
Also, I note the some of the heaviest selling was in early December. How did the Chinese walls work on this one and why was the trading window open at all? I would have thought there should be no trading by any Macquarie entity in the lead up to such a substantial announcement.
This reply came back yesterday from Macquarie spinner Kerrie Lavey:
Macquarie Group lodged a Notice of change of interests of substantial holder on 3 December indicating that it had reduced its interest from 10.16% to 9.13% representing a sale of 21.2m units between October 21 and 3 December. None of this trading relates to the Group's principal holding. It relates to trading of units held on behalf of external clients by Macquarie Investment Management Limited (Macquarie Funds Group) and trading by Macquarie Securities in the ordinary course of business. These trading decisions are independent and there are effective Chinese walls between each of these groups with the result that those who authorised this trading would not have been in possession of non-public information regarding MOF's capital raising or other future plans.
Okay, Chinese Walls and all that, it is still not a good look for any arm of Macquarie to be ditching stock shortly before a deeply discounted rights issue. Given that the Rudd Labor Government has done diddly squat about improving corporate governance rules, it would be too much to expect the corporate plod would even make a few casual inquiries about this one. Ironically, ASIC is the second largest tenant in MOF's signature asset, No1 Martin Place, which doubles as the Millionaire Factory's global head office. ASIC is well placed to drop by to inspect these Chinese walls.
Whatever the trading situation, let's hope Macquarie Office recovers because I've applied for an additional $10,000 worth of units at 20c. This was done when the stock was 25c and before they extended the rights issue for a week and marginally reduced Macquarie's underwriting commitment. It is really annoying when issuers change the rules and Macquarie should have better detailed the exact nature of the underwriting in the initial offer documents.
Meanwhile, check out the substantial shareholder notice filed by Japanese investment giant Mitsui Life on January 15. Whilst Mitsui had been buying Macquarie Office stock gradually at much higher prices last year, it took a whopping 120 million units at 20c in the placement late last year.
Simon Jones, the former Macquarie Office chairman clearly shares Mitsui's view based on this recent email exchange:
Hi Simon, I know you've resigned as chairman but am interested to know whether you've taken up your entitlement to the Macquarie Office 20c rights issue, or whether you've applied for additional shares.
The register is a public document so could always search it but would appreciate a direct reply if that's not too much to ask.
Regards, Stephen Mayne
Macquarie Office unitholder
Reply from Simon Jones
Stephen, taken up my rights and applied for extra units as it represents an attractive deal to me.
Regards
Simon Jones
Executive Director
Macquarie Real Estate Capital
* If you'd like to read all our weekly editions, why not sign up for a free trial or take up our special $99 subscription offer which lasts until June 30, 2009. Alternatively, if you've had enough, click here to unsubscribe from this email list.