ASX AGM, Fairfax, capital raisings, MAP, Bulleen Boomers, Manningham, classic Cornwall, AGM schedule and much more
February 2, 2010
Dear Mayne Reporters,
Herewith a bumper Mayne Report edition, so why not tell your friends to sign up to our free weekly email newsletter.
First up this week, a couple of excellent Cornwall cartoons on the executive pay debate...
Fun and games at the ASX AGM
The 2009 ASX AGM in Sydney last Wednesday was a lively affair at which we asked seven questions. The AFR gave our queries a run without attribution as follows:
Much of the AGM was spent addressing the dilution of retail shareholders through the rush of capital raisings by corporates, which have seen massive offerings of stock at deep discounts towards institutional investors.
The most pointed spray was the opening salvo about how ASX allowed Australia to develop a global reputation for being the Wild West of infrastructure funding, as evidenced by the Babcock implosion and the $345 million Macquarie Group fleeced from its airport fund. Have a listen to the full exchange with chairman David Gonski and CEO Robert Elstone.
There were only two direct contributions on capital raisings and both extracted interesting responses. Have a listen:
What steps is the ASX taking to protect retail investors in capital raisings?
Why can't the ASX fix delayed record dates and casino scale back policies?
The specific comments about dodgy use of delayed record dates and completely unpredictable scale back policies elicited this response from chairman David Gonski suggesting things might be about to change:
All I can do Stephen is compliment you on the constructive nature of both those areas that you've outlined to us They'll either be taken on board in the review that I've foreshadowed. Or I urge you to write those points to us and to ASIC so that they can be embraced in any formal process that we commence in coming months.
And this is what CEO Robert Elstone said when asked if British-style pro-rata rights issues should be mandated:
I don't think its not that we are not hearing what you are saying, I think the issue is, on last count there were somewhere between a dozen to fifteen considerations that a board has to think about when its making a decision on a secondary capital raising. For any of us, even an expert such as yourself, to say that one of those is so important, that the entire rule framework has to be biased to making sure that there is equality, I just think it provides handcuffs throughout all sorts of business cycles and all sorts of capital market conditions which are not proven. With the benefit of hindsight, flexibility should win out over prescription, but having said that, particularly in the last six months, boards, as markets have stabilised, have got to become more atuned, and that's the area we and ASIC will look over in coming months, along the lines of your line of enquiry.
Whilst the major headlines came from Gonski's self-serving warnings about competition and ASIC taking over the traditional ASX responsibility for market supervision, we asked the only question about the transition focusing on who would stand behind the ASX's guarantee fund if ASIC was formally responsible? Observers reckons there has always been an implied guarantee but the ASX heavies strongly rejected this. Have a listen: Is it ASIC or ASX that will stand behind a calamity if SEGC cannot do it?
Good speeches from the ASX directors
When it came to the director elections, the board got a pat on the back for three good speeches from the candidates but the Macquarie Group director Peter Warne got an indirect spray that was focused on why ASX hadn't forced Macquarie and its imitators to release details of pre-emptive rights over key assets within its infrastructure funds. Have a listen: Peter Warne's Macquarie conflict
NAB director Jillian Segal was also up for election but we left her alone until the opportunity presented to point out the very different treatment of retail investors by ANZ and NAB on the resolution dealing with ANZ CFO Peter Marriott joining the ASX board.
Is Peter Marriott sticking with ANZ and thanks for looking after retail
David Gonski came over for a brief chat after the AGM to say thanks for the constructive tone. Indeed, the endorsement of former SFE Corp chairman Rick Holliday-Smith was positive glowing. Have a listen.
I must be getting soft having hit 40.
The full audio breakdown of the ASX AGM is available here.
MAP and friends leave the door open
The ASX AGM included this interesting exchange about companies which announce capital raisings and then leave the door open with a delayed record date.
Despite personally making tens of thousands out of this ruse, at a governance level it is a complete joke and ASX CEO Robert Elstone admitted as much in his answer.
However, the trend is getting worse as more companies adopt the tactic to attract interest in capital raisings and broaden their share registers.
Macquarie Airports first flagged its 1-for-11 entitlement offer at $2.30 a share on August 28 and opportunists started buying in straight awap, especially given the way the Millionaires Factory was trumpeting the fact that investors could apply for extras to take up any shortfall.
This little ruse helped send the stock from $2.40 to almost $2.90 over the ensuing 4 weeks and it may even have influenced some share holders to vote in favour of the $345 million internalisation payment on the expectation they would be looked after by Macquarie with generous allocations from the shortfall.
However, MAP has now potentially shafted these shareholders after revealing last Thursday that the record date would be Monday, October 12. If you're reading this before close of business on Wednesday you may as well buy $500 worth of MAP shares and get on the register, although be prepared for a savage scale back as there will be thousands of others doing exactly the same thing.
Gunns and Brickworks play the delayed record date casino
MAP is certainly not alone in this regard as you can see from this long list naming all companies which left the door open on capital raisings in 2009.
Indeed, we brought you the story of Brickworks in the last edition which left the door open for two days before a $15,000 share purchase plan and saw its register expand almost five-fold.
The ASX should be really alarmed by the distortions this is causing in share prices. Brickworks shares rocketed from about $13 to a high of $16.70 as a frenetic 15,000-plus trades went through in two days on a stock which is normally lucky to attract 200 trades.
However, the opportunists who chased the stock higher could well end up losing more than $1 million because with the record date passing, Brickworks shares have now slumped back to $14.65, a still reasonable 18% above the $12.40 offer price for the $15,000 share purchase plan.
The really smart Brickworks investors were selling down into the frenzy of opportunists scrambling to get on the register and paying silly prices for the privilege.
And that is precisely what the colourful characters at Gunns did after Forest Enterprises Australia announced a 1-for-1 entitlement offer at 7.5c - a whopping 53% discount to the previous close of 16c. Given that the offer also included a placement of 60.8 million shares - the maximum 15% allowable without shareholder approval - at just 7.5c, the share price was always likely to tumble below 10c.
However, because FEA announced all this on September 16, but delayed the record date until September 24, we saw frenetic trading of more than 10 million shares over the next 3 trading days when the stock only got to a low of closing low of 12.5c because the usual army of opportunists were madly buying in. This included four different $500 purchases by camp Mayne.
However, once the gate slammed shut for the record date, the reality of the huge dilution sunk in and the stock closed on Friday at 8.8c, a modest margin of 17.3% above the 7.5c offer price.
So, who were the smart shareholders who sold out to the opportunists before the price collapsed? Step forward Gunns, the second largest FEA shareholder, which revealed on September 28 that it tipped out 2.45 million shares on September 18 and 1.15 million shares on September 21 - the last day to get on board for the entitlement offer.
Gunns pocketed $450,000 from these sales for shares which are now worth $317,000. We've shared in some of the losses and at one level you shouldn't feel sorry for day traders and opportunists attempting to make a quick buck.
However, all of these antics just create a casino atmosphere on our market. Surely if punters aren't allowed to place bets after a race has started, it should also be illegal for companies to continue taking on new share holders after a capital raising has been announced, especially given Australia's "flexible" system which doesn't mandate British-style pro-rata offers which treat all shareholders fairly.
The Age gets on board delayed record dates push
It was good to see Eric Johnson from The Age produce a lead story in today's business section focusing on the delayed record dates, although there was no credit for the material that emerged during the debate at the ASX AGM last Wednesday.
Ironically, this use of the ASX exchanges actually led to an error because I cited Wesfarmers as an example when meaning to say Westfield and the conglomerate copped these two inaccurate mentions in The Age today:
Of key interest is a process used by companies ranging from Asciano to Wesfarmers that offers a window of several days between announcing a rights issue and the cut-off for shareholders to qualify.
Others that have left a window open on rights issues and have experienced a jump in shareholder numbers include Wesfarmers, which added more than 30,000 in a short period following its $1.7 billion retail capital raising this year.
Wesfarmers actually did the right thing because they announced their capital raising on Thursday, January 22 and had a record date of Wednesday, January 28. Whilst those who bought on January 21 were fine under the three day settlement requirements, it was impossible to get on after the announcement because the stock only traded for three of the next five business days given the suspension on January 22 to get the institutional placement away, plus the Australia Day holiday on January 26.
There are more than 20 record date offenders on our master list, but Wesfarmers isn't one of them. That said, Wesfarmers still outrageously ripped off its retail investors by doing a discounted $900 million institutional placement at $14.25 as part of the offer and also scaling back the applications for "overs" by $100 million, even though retail investors had already left $1.2 billion in applications unsubscribed.
Airport commitment prevents Macquarie Airports EGM debate
Whilst the first 40 minutes of the Macquarie Airports EGM last Wednesday was all very interesting, the formal presentations dragged on such that I had to grab a taxi from The Intercontinental to Sydney Airport before question time started given the commitment to give a corporate governance speech at the University of Canberra that night.
Media coverage of our AGM activity is a strange beast some times. The Mayne Report drove the debate at the ASX AGM and extracted some very interesting comments but there wasn't a mention anywhere. Yet at MAP we didn't say boo but an interview with Lateline Business recorded before the meeting was given a good run on ABC1 that night as you can watch below.
I was quite surprised that no media outlet put the ASX and MAP meetings together to create one story. There is no way Macquarie could have performed their highway robbery on MAP shareholders without ASX complicity. These lines from Terry McCrann's excellent column last Wednesday were quoted at the full ASX board as you can hear in this exchange.
Either which way, MAp investors will get stiffed, and the 'stiffor' MacBank can't lose. The very big question is how this ever got allowed in the first place - MacBank effectively locking itself in as permanent manager. The answer is the disgrace otherwise known as the Australian Securities Exchange. It not only allowed this, but allowed MacBank to keep the management terms secret. Talk about greedy bankers; ASX has been worse. Anything goes that will boost turnover and ASX fees.
Gonski directly rejected McCrann's thesis but it was very disappointing the media coverage of ASX just focused on their bleatings about competition when the appalling infrastructure funding structures were on display for the world to see when 78% of shares voted at the MAP EGM endorsed a $345 million heist because there literally was little alternative.
That said, LA-based Capital Group was the largest independent shareholder in MAP with 8.8% and it could have forced Macquarie to relax its divorce terms but chose not to. Maybe this is because Capital Group currently own $700 million worth of shares or about 4% of Macquarie Group and only $430 million worth of shares in Macquarie Airports.
However, about 55% of the $345 million windfall will go into the bonus pool for the Macquarie bankers, so it would have been more effective for Capital to roll up its sleeves and negotiate a better outcome as the largest independent shareholder in MAP. Alas, apparently it couldn't be stuffed. It will be interesting to see if Capital is allocated any shares from the MAP entitlement offer shortfall.
AGM season is up and running
We've put together this comprehensive diary for the AGM season. You will see that October 22 is a very busy day with 13 companies so far booked in, so check it out and send in any corrections or additions to stephen@maynereport.com.
Companies have to give 28 days notice so we now have a complete picture for the rest of October but still don't know the schedule for most of November. At the bottom of the AGM season diary, there is a list of companies we'd like to know dates for and of particular interest are the following, with the reason explained:
Austereo: the board needs a thorough going over for the Kyle Sandilands fiasco.
Babcock & Brown Infrastructure: possibly the last Babcock-branded AGM we'll see.
Boart Longyear: a highly leveraged Macquarie float that cost shareholders more than $1 billion in losses.
Charter Hall: John Gandel got a real inside run on its capital raising, at the expense of other shareholders.
David Jones: be interesting to hear debate just after Myer float.
Eastern Star Gas: chaired by John Anderson who must explain why no SPP after an institutional placement.
Elders: long-serving chair ought to go after company almost went broke.
Fortescue Metals Group: always lots of questions for the colourful Andrew Forrest.
Sunland: what happened in Dubai and why did James Packer quit?
We're naturally in the market for proxies. For instance, if anyone is going to be in New York on October 16 we'd love to appoint you our proxy for the News Corp AGM.
Equally, here is a list of AGMs from our mega diary which have been confirmed but we're unlikely to make and would love to have a proxy attend on our behalf. The reason for our interest is also explained:
Wednesday, October 21
Qantas, 11am, Perth Convention Centre, board deserves a major kicking for Geoff Dixon pay out.
Thursday, October 22
Paperlinx, 10.30am, Jeff's Shed, Melbourne, how on earth did they almost go broke?
Perpetual, 11am, Westin Hotel, Sydney, why are they still playing along with Gunns and not disclosing fund manager pay packets?
Wednesday, October 28
Macquarie Media, 11am, Westin Hotel, Sydney, when are they internalising?
Wednesday, November 4
Transpacific Industries, 10am, Brisbane Hilton, who is accountable after massive suspension and private equity bail out?
Monday, November 9
Seven Network, 11am, Pyrmont HQ, Sydney, will Kerry Stokes run a proper AGM this year, including answering questions?
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The Mayne Report costs more than $70,000 a year to run but the October-November AGM season is normally the most expensive part of the year given the travel expenses getting to AGMs. We're not squandering the whole travel budget flying to New York to annoy Rupert Murdoch this year, but would like to spend about $5000 getting to AGMs in every capital city.
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Who should chair Fairfax Media?
Things have gone a bit quiet at Fairfax Media although Crikey publisher Eric Beecher has continued his long-standing criticism of the company as you can see from this compilation of his thoughts over the past couple of years.
Interestingly, Eric's most recent contribution revealed what happened when he briefed the Fairfax board on the future of newspapers. It's fair to say Eric is no fan of Roger Corbett and I also gave the former Woolworths CEO a touch up in this Crikey story about the no vacancy rule on Friday.
Similarly, Mark Day produced this column for The Australian today also questioning the merit of appointing a 67 year old grocer as Fairfax Media chairman and then flagging some other possible contenders, most of whom would be regarded as fellow Murdoch family loyalists.
News Ltd has long enjoyed watching Fairfax dither and never really take the fight to News Ltd, when this is exactly what Fairfax needs.
Murdoch associates, such as existing Fairfax Media director David Evans, need to be removed and replaced with people who will muscle up to News Ltd rather than happily take calls from the Murdoch family or chat away to News Ltd CEO John Hartigan, as Ron Walker apparently did.
Corbett and the pokies
One of the major concerns about Roger Corbett becoming Fairfax chairman is his history in driving Woolworths further down the pokies and gaming path than any other major retailer in the world.
Australia's sad status as the world's biggest per capita losers when it comes to gambling is the sort of social issue that will always need to be vigorously explored by Fairfax Media outlets, so it just doesn't make sense to have the architect behind the Woolworths 12,000-strong pokies empire, sitting atop a major media company.
You would never see some Las Vegas casino mogul chairing The New York Times or Time Warner so why should Roger Corbett lead Fairfax, especially given his performance has been so poor during his seven long years on the board?
Check out Paul Bendat's excellent pokieact.org website for more about Woolies and pokies and below are a couple of scans from a local paper in Melbourne which is exactly the sort of story that Fairfax papers should be running more of about the practices of their aspiring chairman.
Upcoming speeches: Super Ratings day of confrontation
Below is the text from a flyer about the SuperRatings 'Day of Confrontation' on October 13 where the speakers will include former Treasurer Peter Costello, Dean Paatch from Risk Metrics, Federal Minister for super and corporate law Chris Bowen and yours truly.
Some of the big topics for the day are as follows:
"Sustainable super: Building on Labor's legacy"
Minister Chris Bowen
"Can super survive Labor?"
Peter Costello
"Nip/Tuck: the facelift the superannuation guarantee needs"
Tony Harris and Nicholas Gruen
"Shaken not stirred"
Stephen Mayne on the shake-up the super industry needs
"Risky business"
Dean Paatsch on why transparency is essential for super's long term success
Register your interest here.
Meanwhile, go here to see the list of upcoming speeches we've got and check out some of the feedback from past speeches.
Manningham council meeting and the Bulleen Boomers
We had another public council meeting last Tuesday and it dragged on for a record 4 and a half hours. As a loquacious contributor I'm happy to confess to being part of the problem. Too many of us just love to talk and we're not exactly agreeing on everything.
Surprisingly, one of the longest and certainly the most heated debate last Tuesday was on the question of whether council should contribute $16,000 towards printing and the like for a jumbo community raffle which is currently accessed by more than 20 community groups and raises plenty of cash for lots of good causes.
Seemed like a sensible proposal to me but we had deputy mayor Fred Chua JP stepping out of the room with a conflict and then a 4-4 split, with small government advocate councillor Graeme McMillan cranking up the volume against the proposal and mayor Charles Pick also voting against but then using his casting vote to preserve the status quo.
Another big debate surrounded the issue of ditching the fire works which have been a popular feature of our Carols by Candlelight Christmas celebration at Ruffey Lake Park for the past 25 years.
The same four councillors who supported the raffle - Mayne, Ellis, Gough and La Vella - also supported keeping the fire works but this time it was councillor Chua who delivered the 5th vote. That said, the arguments about dogs not liking fire works and emerging safety issues were perfectly reasonably. Indeed, it was the officers who recommended ditching the fireworks for safety reasons as we all gear up for another challenging fire season.
Planning has been a vexed issue for us councillors over the past 10 months with quite a number of officer recommendations to issue permits getting rolled.
We had another tight vote last Tuesday on a proposed 11 unit development in Wonga Park but this time it was supported by councillor Ivan Reid who along with councillor Meg Downie has voted against the most planning items on the current council. That's democracy, of course, nothing wrong with listening to community concern about the size and scale of development proposals.
However, with the three Mullum Mullum councillors voting against, along with mayor Charles Pick and deputy mayor Fred Chua, this represented the five votes needed to refuse the permit.
Finally on Manningham matters, it was good to see the Bulleen Boomers avenge last year's 3 point grand final defeat at the hands of the Canberra Capitals at the AIS on Friday night in the season opener that was televised on ABC1 on Saturday afternoon.
The boomers are the only Manningham team that competes in a national competition and there's a really good feel about the place that they might break through for their first WNBL championship, especially after recruiting 203cm 18 year Liz Cambage and two-time Olympic medal-winning Opals head coach Tom Maher, who also has seven championships under his belt.
And speaking of coaching, our daughters Alice and Laura participated in a two day clinic put on by the Boomers last week. Pictured below is a very excited Alice, 6, who still can't believe Liz Cambage really is taller than her 196cm daddy.
Finallly on Manningham, edited audio highlights from recent public council meetings are available here although we're still waiting for last Tuesday's meeting to appear on the website.
Tabloid attack on council CEOs
The following was sent to the Herald Sun last Tuesday but for some strange reason didn't make it into the letters page:
To: 'hsletters@heraldsun.com.au'
Subject: response to attack on council CEOs
“It's nice for some” screamed the Herald Sun's front page on Tuesday in what was a very unfair attack on council CEO pay packets.
I've only been a councillor at Manningham since last November and my experience is that our executive team are highly competent and modestly paid as they steer a complex organisation that delivers 100-plus services with more than $1 billion in assets, 650 staff and annual revenues approaching $100 million.
Besides, all 79 council CEOs in Victoria were collectively paid less than the $US19.8 million Rupert Murdoch, executive chairman and largest shareholder in the company which publishes the Herald Sun, received in 2008-09. Talk about people in glass houses. And don't forget that council CEOs have the very tough job of dealing with us councillors.
Stephen Mayne
City of Manningham councillor
Templestowe
More Cornwall cartoons for The Mayne Report
Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing his satirical commentary to the Mayne Report since March 2009. Check out this collection of his best cartoons below are some of the latest offerings:
Nexus capital raising questions
By a Nexus Energy shareholder
Hi Stephen,
I know you have a sense of humour and thought you might get a laugh out of this.
I have just skipped through a prospectus for Nexus Energy, complete with duplicate pages in the wrong order and a hilarious section about underwriting arrangements.
As far as I can tell, shareholders will pay shares worth nearly $4.35m (assuming they get permission to gift extra value to the underwriter by issuing undervalued scrip instead of more than $3m in cash) to underwriter Southern Cross Equity so that SCE can pay some of this to Azure capital so that Azure capital will gift $2.4m to the proposed directors Messrs Drake Brockman and Clauson and gift them somewhere between 0 and $9m worth of entitlement to shortfall value at current market prices.
It must have been a hard decision for the board -
1. offer shareholders the opportunity to subscribe for additional heavily discounted shares and obviate the need to pay for underwriting
2. pay 4.35m of stock to ensure that the proposed directors would be gifted $2.4m of free stock plus the first 100m shares of heavily discounted stock
I haven't bothered checking out the directors remuneration policies of this firm but its quite likely a great laugh too.
Cheers, Geoff
Mayne Report: we're certainly aiming to attend the upcoming Nexus AGM, but no details have been released yet. However, it should be pointed out that distressed companies sometime face punitive terms when attracting new investors and this sounds like a good example.
Companies worth more than $10m we'd love to own
Check out this list of more than 400 listed companies with a market capitalisation above $10 million that we don't own.
We're attempting to rectify the situation and have added 10 news stocks to the portfolio in this list of all our recent trades since you were last updated. For the first time, we've also explained the reason for the trades as follows:
October 2
Chemgenex: bought 715 at 70c (new stock)
Prime Media: bought 770 at 65.5c (Paul Ramsay, Lachlan Murdoch and Kerry Stokes are all in the mix, so we had to buy it)
ARB Corp: bought 109 at $4.60 (new stock)
October 1
Macquarie Airports: bought 348 at $2.88 (added Paula, the wonderful wife, to the register for a second crack at entitlement offer overs)
Fairfax Media: sold 310 at $1.68 (Paula selling down to the normal 10 shares)
Ampella Mining: sold 1,310 at 57c (exiting a tiddler which left the door open but didn't deliver)
Campbell Brothers: bought 16 at $31.66 (getting on register for rights issue given door left open)
Lynas Corp: bought 741 at 67c (missed entitlement offer but need to be on register given FIRB blocked Chinese takeover)
September 29
Moly Mines: bought 995 at $1.03 (added Paula for second crack at Twiggy's vaguely promised capital raising)
Skilled Group: sold 666 at $2.05 (exiting scaled back share purchase plan)
Antares Energy: sold 1,590 at 24.5c (exiting a tiddler which left the door open but didn't deliver)
Spotless: sold 6,945 at $2.54 (exiting share purchase plan play)
Energy & Minerals Aust: sold 19,450 options at 7.2c ($1440 windfall on options hadn't even noticed from capital raising play)
Oncard: sold 3,090 at 18c (exiting one of two holdings - no need to double up)
September 28
Amcor: sold 80 at $5.51 (exiting scaled back entitlement offer)
Brambles: sold 83 at $7.91 (exiting one of three holdings given tipped capital raising appears unlikely to materialise)
Westfield: sold 46 at $13.41 (exiting one of three holdings given tipped capital raising appears unlikely to materialise)
The Rock: bought 200 at $2.50 (new holding)
Extract Resources: bought 56 at $8.97 (capped at $2 billion, so should have been on register long ago)
September 25
Goodman Group: sold 1150 at 59c (exiting one of three holdings after capital raising play completed)
September 23
Bass Strait Oil: bought 17,421 at 5.8c (getting on board given door left open with capital raising)
September 22
AWB: bought 345 at $1.46 (picked up second holding just in time given SMH tipped capital raising the day before it happened)
Bank of Queensland: sold 799 at $10.81 (exiting capital raising play)
MacArthur Cook Industrial Fund: bought 1789 at 28c (on board for hostile EGM proxy battle, but was too late)
Milton Corporation: bought 30 at $17.04 (new holding and AGM coming up but never on register)
Sedgman Ltd: sold 2,692 at $1.69 (exiting capital raising play)
Traffic Technologies: bought 8621 at 5.8c (getting on register for EGM proxy stoush)
Check out this complete alphabetical list of our dealings in almost 800 companies over the years although beware there are quite a number of gaps. Also, go here for the full portfolio and trading histories sliced and diced in a variety of interesting ways.
The goal now is to push the portfolio up towards 1000 stocks so here are the buy orders we placed on Friday:
Most recent Mayne Report editons
Sign up here to receive the weekly Mayne Report member editions for free and you can see an archive of all editions from 2008 and 2007.
If you've only just got on board or missed some recent missives, try these for size:
September - 4 editions
Compass, MAP, dodgy SPPs, exec pay, Mirrabooka AGM, Manningham, capital raisings, Rich List and much more
September 26, 2009
Fairfax, RACV elections, MAP, capital raisings, Manningham, Wallis, hostile EGMs, video, AGM diary, rich list and much more
September 22, 2009
Bad Bendigo, Mark Day, Manningham, pokies, NAB, Asciano, Rich List, Paladin, hostile EGMs and much more
September 15, 2009
Elders rip-off, NAB excuses, Woolies grog push, Virgin scale back, Australand windfall, McCrann, Walkleys, activism, Macek, AMP and much more
September 8, 2009
August - 4 editions
Come along tomorrow, Fairfax article, profit season, Business View, Australand looks good and NAB scandal
August 28, 2009
NAB shafting, capital raisings, pokies, council taxes, REA Group, Laker, Richies and much more
August 25, 2009
Manningham, bank bashing, capital raisings, Fairfax, Asciano, NAB, McCrann, Charlie Aitken, developers and much more
August 17, 2009
Macquarie, Trevor Rowe, capital raisings, Murdoch, Rich List, Qld In and much more
August 7, 2009
The latest capital raising plays
Check out this complete chronological list of all capital raising plays in 2009 and at the bottom is a list of the 20 or so upcoming offers.
There's also this version ranking the top 50-plus plays since January. For the latest shuffles in our ridiculously large tiny share portfolio, check out all trades in 2009 plus the full portfolio of more than 700 holdings.
September finished up with a gross gain of $32,229 after three successful plays last Monday which unfolded as follows:
September 29
Skilled Engineering: $15,000 into SPP at $1.50 but scaled back to 666 shares worth $1000 and sold at $2.05 for a $366 profit.
Spotless: $15,000 into SPP at $2.16. No scale back and sold at $2.54 for a gross profit of $2642.
EMA: belatedly exited options hadn't noticed from earlier offer to collect $1440.
Meanwhile, here is the list of applications we've currently got out there for capital raising offers:
CMA Corp: $4500 into $15,000 SPP at 10c which closes October 8 and trades October 20.
Cougar Energy: $20,000 into two $15,000 SPP entitlements at 8.25c. Trades October 6.
Elders: $600 so far into two $20,000 SPP entitlements at 15c. Closes on October 23 and trades November 3.
Folkestone: $7,200 into 2-for-1 entitlement offer at 15c with ability to apply for extra. Trades October 7.
Gunns: $18,000 into entitlement offer at 90c. Scale back flagged with details to come and trades October 8.
Healthscope: $15,000 into SPP at $4.19. Closed October 1 and trades October 13.
Industrea: $5000 so far into $15,000 SPP at 42c or 5% discount. Closes October 9 and trades October 14.
Isoft: full $15,000 into SPP at 5% discount to market. Closes October 6 and trades October 15.
Ramsay Healthcare: $35,000 into three $15,000 SPP offers at $9.835 but scaled back to $3000. Trades October 8.
Real Estate Capital Partners: $7000 so far into $15,000 SPP at 15c or 7.5% discount. Closes October 9 and trades on October 21.
TFS Corp: $2000 into $15,000 SPP at $1 or market price which closed October 2 and trades October 16.
Watpac: $4000 so far into three $15,000 SPPs at $1.25 after placement. Closes October 12 and trades October 23.
Total live applications: $133,300
A belated new addition to $100m loss club
The 2008-09 reporting season was the worst we've ever seen. Here's a chronological list of how the 53 losses above $100 million were rolled out, and below is the last entry which was released a month after everyone else:
September 30
Hedley Leisure & Gaming Fund: declared a $178 million loss for the full year after hefty write-downs which reduced claimed net assets from $326 million to $160 million when the market capitalisation is down below $50 million.
The Mayne Report Rich List
Since we began compiling the Mayne Report Rich List documenting every Australian currently or previously worth more then $10 million, it has grown in numbers and popularity such that no other feature on our website can match it for traffic. These are the three most popular articles on our site, and as you can see, the Mayne Report Rich List is more than double its closest rival.
The Mayne Report Rich List
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Visits 51,061
Share transactions so far in 2009
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The 2009 capital raising plays
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Let us introduce to you our 1400th member...
Ash Hunter: owner of the Hunter 5 group of companies which owns Just Magazines Publishing a classifieds listings service for used vehicles and other equipment. Started by his father in 1989, readership has grown to more than 200,000, which has pushed his personal fortune beyond $55 million.
Mayne Report video blog
ABC TV Compass
What Should I Do? - Part 1
Once upon a time the big decisions in life were about births, deaths and marriages. But today many of our little, everyday decisions have grown into big dilemmas. Check out some of the ethical debates that were featured on Compass eight days ago.
We have put together playlists of videos covering similar topics and additionally, collections of videos from television appearances. Check out these special edition videos here.
Press room and podcasts
Below are this week's contributions:
Radio
720 ABC Perth discussing executive pay reforms.
774 ABC Melbourne: discussing the Myer float, interest rates and the world of finance with Libby Gore.
666 ABC Canberra: talking about corporate governance, executive pay and the corporate governance lecture at the University of Canberra.
Crikey
Fairfax recruit exposes the no vacancy rort being used by Fairfax
October 2, 2009
When will News expose the Evans/Fairfax conflict, Terry?
September 29, 2009
Corporates clear the ASX trash on Grand Final Eve
September 28, 2009
Click the link above to get the latest radio and AGM audio.
Mayne Report RSS Feeds
The Mayne Report now has RSS feeds for you. We have bundled our best articles into a simple and easy delivery for you. Add an RSS feed to your personal reader, iGoogle, MyYahoo, or blog. It's quick and easy to do and means you're always up to date with the latest Mayne Report activity.
Dividend cheques should be a thing of the past
Below is some email correspondance with Santos spinner Matt Doman about why they sent us a dividend cheque with no direct debit form:
Hi Matt, I'm on 700 registers and the vast majority of companies that don't have someone's bank account details for direct debit of dividends send a form with the dividend cheque until it is filled in. Some companies like AMP and Telstra are refusing to send cheques at all.
This week I got a dividend cheque with no direct debit form from Santos and suspect this has now happened a few times as I always opt for direct debit.
Could you please let me know the company policy and also the proportion of shareholders (if any) getting direct debits. How do you get them on direct debit and why the continuation of annoying cheques?
Cheers, Stephen Mayne
Sent: Friday, 2 October 2009 1:29 PM
To: stephen@maynereport.com
Subject: FW: cheques
Gday Stephen:
Our policy is that shareholders have three choices for receiving their dividends:
* Direct credit to a bank account;
* Dividend reinvestment plan, in which case they elect to receive new shares instead of cash;
* Cheque in the mail.
If shareholders elect to receive a cheque, they also receive a direct credit form and a reply paid envelope with their cheque. In this way, we are encouraging shareholders who want to receive cash to sign up for direct credit of dividends. However, we have not adopted the policy of some companies that refuse to offer cheques as there are still shareholders who are uncomfortable in providing their bank account details to companies.
As with all shareholders, you would have received a direct credit form and reply paid envelope with your dividend cheque.
For the recent interim dividend, the breakdown of payment methods to shareholders was:
Direct credit 57%
DRP 22%
Cheque 21%
Trust your well, Matt Doman
Hmmm, doesn't really answer the question but provides some interesting statistics all the same.
The Mayne Report traffic
The months of August and September were our best since inception in September 2007 and the details were as follows:
August 2009
137,261 page views
87,679 unique visits
The most popular article for the month was Ranking the 2009 SPP plays which had 9,556 page views followed closely by The 2009 capital raising plays which had 7,778 page views.
September 2009
133,298 page views
87,279 unique visits
The 2009 capital raising plays which had 7,448 page views this month was our most popular, followed by the Mayne Report Rich List with 3,543 page views.
Video
Our video blog had 12,924 page views in September with a spike of over 3,500 people on Tuesday, September 15, attributable to this Fairfax column on capital raisings. This is a healthy figure but doesn't match August where we had 13,649 viewers, with a spike of 7,300 on Friday, August 7, attributable to our seventh instalment on capital raisings for Fairfax websites and a strong Mayne Report email edition sent that day.
Sign up for Mayne Report Tweets
We have only been twittering for a few months, but now have 771 followers who have received 145 tweets. We are regularly dropping out the latest developments from AGMs, capital raising plays and even Manningham Council. Sign up below to get the latest updates from all our activity and check out our latest tweets since the last edition:
4:10pm Oct 1: Big Crikey story today on Fairfax and the no vacancy rort. Working on latest edition and capital raising profits drying up with scale backs.
5:56pm Sep 30: Interview on 720 ABC Perth about executive pay reforms http://bit.ly/HI8wj
7:19pm Sep 29: ASX AGM today in Sydney where we asked seven questions http://bit.ly/xHaAO
5:32pm Sep 29: 666 ABC Canberra talking about corporate governance, executive pay http://bit.ly/2go7Ml
1.42pm Sep 29: Heavy Ramsay Healthcare SPP scaleback. In Sydney for ASX AGM at 10.30am. Doing ABC Canberra at 10.45. Very tired after late council meeting.
3:24pm Sep 28: Exited Spotless and Skilled Engineering SPPs along with overlooked EMA options for profit of $4400 to finish September up $32,229. Not bad.
8:36pm Sep 27: 774 ABC Melbourne discussing the Myer float, interest rates and the world of finance http://bit.ly/18rl02
5:54pm Sep 27: Amazing statement from Fairfax NEDs backing Ron and slagging Fairfaxes: http://imagesignal.comsec.c
5:02pm Sep 27: Heavy scale back from 15k to 1k by Skilled Engineering. Myer float is costing more than $110m. What a gravy train of hype. Buyer beware!
9:24pm Sep 27: Appearing on Compass at 10.05pm on ABC1 tonight and just sent this edition: http://bit.ly/aXB8S
The complete list of lists
The Mayne Report loves a good list and on this page we have a complete compilation with links to all of the offerings we've worked up over the past few years. Where available, we have included statistics on the popularity of each list.
Some nice feedback
Finally this week as we keep pounding away working up to 12 hours a day juggling council, shareholder activism, the talk circuit, radio and freelance commitments, it is nice to get the occasional piece of positive feedback such as the following from an ASX shareholder I've never met before:
Sent: Friday, 2 October 2009 1:02 PM
To: stephen@maynereport.com
Subject: Thanks
Stephen,
Just a quick note to say thanks and well done for asking the hard questions at the ASX AGM yesterday. In fact, well done all round. I'm a big fan of your work keeping corporate Australia on their toes.
In the 20 or so AGMs I've attended this year, I think you have been at the majority. Without a doubt, I and everyone else present admires the research you perform and thoughtful questions you level at the board.
Keep up the great work.
Regards, Andy
Sydney
Hmmm, who knows whether the long term goal of sitting on the ASX board helping make the rules to protect investors will ever come to fruition. One suspects not but we'll keep banging away.
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.
Herewith a bumper Mayne Report edition, so why not tell your friends to sign up to our free weekly email newsletter.
First up this week, a couple of excellent Cornwall cartoons on the executive pay debate...
Fun and games at the ASX AGM
The 2009 ASX AGM in Sydney last Wednesday was a lively affair at which we asked seven questions. The AFR gave our queries a run without attribution as follows:
Much of the AGM was spent addressing the dilution of retail shareholders through the rush of capital raisings by corporates, which have seen massive offerings of stock at deep discounts towards institutional investors.
The most pointed spray was the opening salvo about how ASX allowed Australia to develop a global reputation for being the Wild West of infrastructure funding, as evidenced by the Babcock implosion and the $345 million Macquarie Group fleeced from its airport fund. Have a listen to the full exchange with chairman David Gonski and CEO Robert Elstone.
There were only two direct contributions on capital raisings and both extracted interesting responses. Have a listen:
What steps is the ASX taking to protect retail investors in capital raisings?
Why can't the ASX fix delayed record dates and casino scale back policies?
The specific comments about dodgy use of delayed record dates and completely unpredictable scale back policies elicited this response from chairman David Gonski suggesting things might be about to change:
All I can do Stephen is compliment you on the constructive nature of both those areas that you've outlined to us They'll either be taken on board in the review that I've foreshadowed. Or I urge you to write those points to us and to ASIC so that they can be embraced in any formal process that we commence in coming months.
And this is what CEO Robert Elstone said when asked if British-style pro-rata rights issues should be mandated:
I don't think its not that we are not hearing what you are saying, I think the issue is, on last count there were somewhere between a dozen to fifteen considerations that a board has to think about when its making a decision on a secondary capital raising. For any of us, even an expert such as yourself, to say that one of those is so important, that the entire rule framework has to be biased to making sure that there is equality, I just think it provides handcuffs throughout all sorts of business cycles and all sorts of capital market conditions which are not proven. With the benefit of hindsight, flexibility should win out over prescription, but having said that, particularly in the last six months, boards, as markets have stabilised, have got to become more atuned, and that's the area we and ASIC will look over in coming months, along the lines of your line of enquiry.
Whilst the major headlines came from Gonski's self-serving warnings about competition and ASIC taking over the traditional ASX responsibility for market supervision, we asked the only question about the transition focusing on who would stand behind the ASX's guarantee fund if ASIC was formally responsible? Observers reckons there has always been an implied guarantee but the ASX heavies strongly rejected this. Have a listen: Is it ASIC or ASX that will stand behind a calamity if SEGC cannot do it?
Good speeches from the ASX directors
When it came to the director elections, the board got a pat on the back for three good speeches from the candidates but the Macquarie Group director Peter Warne got an indirect spray that was focused on why ASX hadn't forced Macquarie and its imitators to release details of pre-emptive rights over key assets within its infrastructure funds. Have a listen: Peter Warne's Macquarie conflict
NAB director Jillian Segal was also up for election but we left her alone until the opportunity presented to point out the very different treatment of retail investors by ANZ and NAB on the resolution dealing with ANZ CFO Peter Marriott joining the ASX board.
Is Peter Marriott sticking with ANZ and thanks for looking after retail
David Gonski came over for a brief chat after the AGM to say thanks for the constructive tone. Indeed, the endorsement of former SFE Corp chairman Rick Holliday-Smith was positive glowing. Have a listen.
I must be getting soft having hit 40.
The full audio breakdown of the ASX AGM is available here.
MAP and friends leave the door open
The ASX AGM included this interesting exchange about companies which announce capital raisings and then leave the door open with a delayed record date.
Despite personally making tens of thousands out of this ruse, at a governance level it is a complete joke and ASX CEO Robert Elstone admitted as much in his answer.
However, the trend is getting worse as more companies adopt the tactic to attract interest in capital raisings and broaden their share registers.
Macquarie Airports first flagged its 1-for-11 entitlement offer at $2.30 a share on August 28 and opportunists started buying in straight awap, especially given the way the Millionaires Factory was trumpeting the fact that investors could apply for extras to take up any shortfall.
This little ruse helped send the stock from $2.40 to almost $2.90 over the ensuing 4 weeks and it may even have influenced some share holders to vote in favour of the $345 million internalisation payment on the expectation they would be looked after by Macquarie with generous allocations from the shortfall.
However, MAP has now potentially shafted these shareholders after revealing last Thursday that the record date would be Monday, October 12. If you're reading this before close of business on Wednesday you may as well buy $500 worth of MAP shares and get on the register, although be prepared for a savage scale back as there will be thousands of others doing exactly the same thing.
Gunns and Brickworks play the delayed record date casino
MAP is certainly not alone in this regard as you can see from this long list naming all companies which left the door open on capital raisings in 2009.
Indeed, we brought you the story of Brickworks in the last edition which left the door open for two days before a $15,000 share purchase plan and saw its register expand almost five-fold.
The ASX should be really alarmed by the distortions this is causing in share prices. Brickworks shares rocketed from about $13 to a high of $16.70 as a frenetic 15,000-plus trades went through in two days on a stock which is normally lucky to attract 200 trades.
However, the opportunists who chased the stock higher could well end up losing more than $1 million because with the record date passing, Brickworks shares have now slumped back to $14.65, a still reasonable 18% above the $12.40 offer price for the $15,000 share purchase plan.
The really smart Brickworks investors were selling down into the frenzy of opportunists scrambling to get on the register and paying silly prices for the privilege.
And that is precisely what the colourful characters at Gunns did after Forest Enterprises Australia announced a 1-for-1 entitlement offer at 7.5c - a whopping 53% discount to the previous close of 16c. Given that the offer also included a placement of 60.8 million shares - the maximum 15% allowable without shareholder approval - at just 7.5c, the share price was always likely to tumble below 10c.
However, because FEA announced all this on September 16, but delayed the record date until September 24, we saw frenetic trading of more than 10 million shares over the next 3 trading days when the stock only got to a low of closing low of 12.5c because the usual army of opportunists were madly buying in. This included four different $500 purchases by camp Mayne.
However, once the gate slammed shut for the record date, the reality of the huge dilution sunk in and the stock closed on Friday at 8.8c, a modest margin of 17.3% above the 7.5c offer price.
So, who were the smart shareholders who sold out to the opportunists before the price collapsed? Step forward Gunns, the second largest FEA shareholder, which revealed on September 28 that it tipped out 2.45 million shares on September 18 and 1.15 million shares on September 21 - the last day to get on board for the entitlement offer.
Gunns pocketed $450,000 from these sales for shares which are now worth $317,000. We've shared in some of the losses and at one level you shouldn't feel sorry for day traders and opportunists attempting to make a quick buck.
However, all of these antics just create a casino atmosphere on our market. Surely if punters aren't allowed to place bets after a race has started, it should also be illegal for companies to continue taking on new share holders after a capital raising has been announced, especially given Australia's "flexible" system which doesn't mandate British-style pro-rata offers which treat all shareholders fairly.
The Age gets on board delayed record dates push
It was good to see Eric Johnson from The Age produce a lead story in today's business section focusing on the delayed record dates, although there was no credit for the material that emerged during the debate at the ASX AGM last Wednesday.
Ironically, this use of the ASX exchanges actually led to an error because I cited Wesfarmers as an example when meaning to say Westfield and the conglomerate copped these two inaccurate mentions in The Age today:
Of key interest is a process used by companies ranging from Asciano to Wesfarmers that offers a window of several days between announcing a rights issue and the cut-off for shareholders to qualify.
Others that have left a window open on rights issues and have experienced a jump in shareholder numbers include Wesfarmers, which added more than 30,000 in a short period following its $1.7 billion retail capital raising this year.
Wesfarmers actually did the right thing because they announced their capital raising on Thursday, January 22 and had a record date of Wednesday, January 28. Whilst those who bought on January 21 were fine under the three day settlement requirements, it was impossible to get on after the announcement because the stock only traded for three of the next five business days given the suspension on January 22 to get the institutional placement away, plus the Australia Day holiday on January 26.
There are more than 20 record date offenders on our master list, but Wesfarmers isn't one of them. That said, Wesfarmers still outrageously ripped off its retail investors by doing a discounted $900 million institutional placement at $14.25 as part of the offer and also scaling back the applications for "overs" by $100 million, even though retail investors had already left $1.2 billion in applications unsubscribed.
Airport commitment prevents Macquarie Airports EGM debate
Whilst the first 40 minutes of the Macquarie Airports EGM last Wednesday was all very interesting, the formal presentations dragged on such that I had to grab a taxi from The Intercontinental to Sydney Airport before question time started given the commitment to give a corporate governance speech at the University of Canberra that night.
Media coverage of our AGM activity is a strange beast some times. The Mayne Report drove the debate at the ASX AGM and extracted some very interesting comments but there wasn't a mention anywhere. Yet at MAP we didn't say boo but an interview with Lateline Business recorded before the meeting was given a good run on ABC1 that night as you can watch below.
I was quite surprised that no media outlet put the ASX and MAP meetings together to create one story. There is no way Macquarie could have performed their highway robbery on MAP shareholders without ASX complicity. These lines from Terry McCrann's excellent column last Wednesday were quoted at the full ASX board as you can hear in this exchange.
Either which way, MAp investors will get stiffed, and the 'stiffor' MacBank can't lose. The very big question is how this ever got allowed in the first place - MacBank effectively locking itself in as permanent manager. The answer is the disgrace otherwise known as the Australian Securities Exchange. It not only allowed this, but allowed MacBank to keep the management terms secret. Talk about greedy bankers; ASX has been worse. Anything goes that will boost turnover and ASX fees.
Gonski directly rejected McCrann's thesis but it was very disappointing the media coverage of ASX just focused on their bleatings about competition when the appalling infrastructure funding structures were on display for the world to see when 78% of shares voted at the MAP EGM endorsed a $345 million heist because there literally was little alternative.
That said, LA-based Capital Group was the largest independent shareholder in MAP with 8.8% and it could have forced Macquarie to relax its divorce terms but chose not to. Maybe this is because Capital Group currently own $700 million worth of shares or about 4% of Macquarie Group and only $430 million worth of shares in Macquarie Airports.
However, about 55% of the $345 million windfall will go into the bonus pool for the Macquarie bankers, so it would have been more effective for Capital to roll up its sleeves and negotiate a better outcome as the largest independent shareholder in MAP. Alas, apparently it couldn't be stuffed. It will be interesting to see if Capital is allocated any shares from the MAP entitlement offer shortfall.
AGM season is up and running
We've put together this comprehensive diary for the AGM season. You will see that October 22 is a very busy day with 13 companies so far booked in, so check it out and send in any corrections or additions to stephen@maynereport.com.
Companies have to give 28 days notice so we now have a complete picture for the rest of October but still don't know the schedule for most of November. At the bottom of the AGM season diary, there is a list of companies we'd like to know dates for and of particular interest are the following, with the reason explained:
Austereo: the board needs a thorough going over for the Kyle Sandilands fiasco.
Babcock & Brown Infrastructure: possibly the last Babcock-branded AGM we'll see.
Boart Longyear: a highly leveraged Macquarie float that cost shareholders more than $1 billion in losses.
Charter Hall: John Gandel got a real inside run on its capital raising, at the expense of other shareholders.
David Jones: be interesting to hear debate just after Myer float.
Eastern Star Gas: chaired by John Anderson who must explain why no SPP after an institutional placement.
Elders: long-serving chair ought to go after company almost went broke.
Fortescue Metals Group: always lots of questions for the colourful Andrew Forrest.
Sunland: what happened in Dubai and why did James Packer quit?
We're naturally in the market for proxies. For instance, if anyone is going to be in New York on October 16 we'd love to appoint you our proxy for the News Corp AGM.
Equally, here is a list of AGMs from our mega diary which have been confirmed but we're unlikely to make and would love to have a proxy attend on our behalf. The reason for our interest is also explained:
Wednesday, October 21
Qantas, 11am, Perth Convention Centre, board deserves a major kicking for Geoff Dixon pay out.
Thursday, October 22
Paperlinx, 10.30am, Jeff's Shed, Melbourne, how on earth did they almost go broke?
Perpetual, 11am, Westin Hotel, Sydney, why are they still playing along with Gunns and not disclosing fund manager pay packets?
Wednesday, October 28
Macquarie Media, 11am, Westin Hotel, Sydney, when are they internalising?
Wednesday, November 4
Transpacific Industries, 10am, Brisbane Hilton, who is accountable after massive suspension and private equity bail out?
Monday, November 9
Seven Network, 11am, Pyrmont HQ, Sydney, will Kerry Stokes run a proper AGM this year, including answering questions?
Donate to help keep this free service (plus pay for a few flights to AGMs)
Over the past two weeks we have received more than $1400 in donations. Thank you all for generously contributing and helping keep
The Mayne Report operating as a free service. We have put together this honour roll for those who have donated and it includes the following:
September 28
Beverley: donated $50
Andrew: donated $50
Lucian: donated $100
Kiren: donated $100
September 23
Peter: donated $50
Tim: donated $25
George: donated $500
Rory: donated $25
September 22
Dario: donated $50
Chris: donated $50
Eduard: donated $25
David: donated $25
Peter: donated $300
Timothy: donated $20
September 15
Stuart: donated $25
September 11
Eric: donated $50
The Mayne Report costs more than $70,000 a year to run but the October-November AGM season is normally the most expensive part of the year given the travel expenses getting to AGMs. We're not squandering the whole travel budget flying to New York to annoy Rupert Murdoch this year, but would like to spend about $5000 getting to AGMs in every capital city.
If you fancy helping out, please click on the image below to make a small donation and we'd be delighted to add you to our donors honour board.
Who should chair Fairfax Media?
Things have gone a bit quiet at Fairfax Media although Crikey publisher Eric Beecher has continued his long-standing criticism of the company as you can see from this compilation of his thoughts over the past couple of years.
Interestingly, Eric's most recent contribution revealed what happened when he briefed the Fairfax board on the future of newspapers. It's fair to say Eric is no fan of Roger Corbett and I also gave the former Woolworths CEO a touch up in this Crikey story about the no vacancy rule on Friday.
Similarly, Mark Day produced this column for The Australian today also questioning the merit of appointing a 67 year old grocer as Fairfax Media chairman and then flagging some other possible contenders, most of whom would be regarded as fellow Murdoch family loyalists.
News Ltd has long enjoyed watching Fairfax dither and never really take the fight to News Ltd, when this is exactly what Fairfax needs.
Murdoch associates, such as existing Fairfax Media director David Evans, need to be removed and replaced with people who will muscle up to News Ltd rather than happily take calls from the Murdoch family or chat away to News Ltd CEO John Hartigan, as Ron Walker apparently did.
Corbett and the pokies
One of the major concerns about Roger Corbett becoming Fairfax chairman is his history in driving Woolworths further down the pokies and gaming path than any other major retailer in the world.
Australia's sad status as the world's biggest per capita losers when it comes to gambling is the sort of social issue that will always need to be vigorously explored by Fairfax Media outlets, so it just doesn't make sense to have the architect behind the Woolworths 12,000-strong pokies empire, sitting atop a major media company.
You would never see some Las Vegas casino mogul chairing The New York Times or Time Warner so why should Roger Corbett lead Fairfax, especially given his performance has been so poor during his seven long years on the board?
Check out Paul Bendat's excellent pokieact.org website for more about Woolies and pokies and below are a couple of scans from a local paper in Melbourne which is exactly the sort of story that Fairfax papers should be running more of about the practices of their aspiring chairman.
Upcoming speeches: Super Ratings day of confrontation
Below is the text from a flyer about the SuperRatings 'Day of Confrontation' on October 13 where the speakers will include former Treasurer Peter Costello, Dean Paatch from Risk Metrics, Federal Minister for super and corporate law Chris Bowen and yours truly.
Some of the big topics for the day are as follows:
"Sustainable super: Building on Labor's legacy"
Minister Chris Bowen
"Can super survive Labor?"
Peter Costello
"Nip/Tuck: the facelift the superannuation guarantee needs"
Tony Harris and Nicholas Gruen
"Shaken not stirred"
Stephen Mayne on the shake-up the super industry needs
"Risky business"
Dean Paatsch on why transparency is essential for super's long term success
Register your interest here.
Meanwhile, go here to see the list of upcoming speeches we've got and check out some of the feedback from past speeches.
Manningham council meeting and the Bulleen Boomers
We had another public council meeting last Tuesday and it dragged on for a record 4 and a half hours. As a loquacious contributor I'm happy to confess to being part of the problem. Too many of us just love to talk and we're not exactly agreeing on everything.
Surprisingly, one of the longest and certainly the most heated debate last Tuesday was on the question of whether council should contribute $16,000 towards printing and the like for a jumbo community raffle which is currently accessed by more than 20 community groups and raises plenty of cash for lots of good causes.
Seemed like a sensible proposal to me but we had deputy mayor Fred Chua JP stepping out of the room with a conflict and then a 4-4 split, with small government advocate councillor Graeme McMillan cranking up the volume against the proposal and mayor Charles Pick also voting against but then using his casting vote to preserve the status quo.
Another big debate surrounded the issue of ditching the fire works which have been a popular feature of our Carols by Candlelight Christmas celebration at Ruffey Lake Park for the past 25 years.
The same four councillors who supported the raffle - Mayne, Ellis, Gough and La Vella - also supported keeping the fire works but this time it was councillor Chua who delivered the 5th vote. That said, the arguments about dogs not liking fire works and emerging safety issues were perfectly reasonably. Indeed, it was the officers who recommended ditching the fireworks for safety reasons as we all gear up for another challenging fire season.
Planning has been a vexed issue for us councillors over the past 10 months with quite a number of officer recommendations to issue permits getting rolled.
We had another tight vote last Tuesday on a proposed 11 unit development in Wonga Park but this time it was supported by councillor Ivan Reid who along with councillor Meg Downie has voted against the most planning items on the current council. That's democracy, of course, nothing wrong with listening to community concern about the size and scale of development proposals.
However, with the three Mullum Mullum councillors voting against, along with mayor Charles Pick and deputy mayor Fred Chua, this represented the five votes needed to refuse the permit.
Finally on Manningham matters, it was good to see the Bulleen Boomers avenge last year's 3 point grand final defeat at the hands of the Canberra Capitals at the AIS on Friday night in the season opener that was televised on ABC1 on Saturday afternoon.
The boomers are the only Manningham team that competes in a national competition and there's a really good feel about the place that they might break through for their first WNBL championship, especially after recruiting 203cm 18 year Liz Cambage and two-time Olympic medal-winning Opals head coach Tom Maher, who also has seven championships under his belt.
And speaking of coaching, our daughters Alice and Laura participated in a two day clinic put on by the Boomers last week. Pictured below is a very excited Alice, 6, who still can't believe Liz Cambage really is taller than her 196cm daddy.
Finallly on Manningham, edited audio highlights from recent public council meetings are available here although we're still waiting for last Tuesday's meeting to appear on the website.
Tabloid attack on council CEOs
The following was sent to the Herald Sun last Tuesday but for some strange reason didn't make it into the letters page:
To: 'hsletters@heraldsun.com.au'
Subject: response to attack on council CEOs
“It's nice for some” screamed the Herald Sun's front page on Tuesday in what was a very unfair attack on council CEO pay packets.
I've only been a councillor at Manningham since last November and my experience is that our executive team are highly competent and modestly paid as they steer a complex organisation that delivers 100-plus services with more than $1 billion in assets, 650 staff and annual revenues approaching $100 million.
Besides, all 79 council CEOs in Victoria were collectively paid less than the $US19.8 million Rupert Murdoch, executive chairman and largest shareholder in the company which publishes the Herald Sun, received in 2008-09. Talk about people in glass houses. And don't forget that council CEOs have the very tough job of dealing with us councillors.
Stephen Mayne
City of Manningham councillor
Templestowe
More Cornwall cartoons for The Mayne Report
Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing his satirical commentary to the Mayne Report since March 2009. Check out this collection of his best cartoons below are some of the latest offerings:
Nexus capital raising questions
By a Nexus Energy shareholder
Hi Stephen,
I know you have a sense of humour and thought you might get a laugh out of this.
I have just skipped through a prospectus for Nexus Energy, complete with duplicate pages in the wrong order and a hilarious section about underwriting arrangements.
As far as I can tell, shareholders will pay shares worth nearly $4.35m (assuming they get permission to gift extra value to the underwriter by issuing undervalued scrip instead of more than $3m in cash) to underwriter Southern Cross Equity so that SCE can pay some of this to Azure capital so that Azure capital will gift $2.4m to the proposed directors Messrs Drake Brockman and Clauson and gift them somewhere between 0 and $9m worth of entitlement to shortfall value at current market prices.
It must have been a hard decision for the board -
1. offer shareholders the opportunity to subscribe for additional heavily discounted shares and obviate the need to pay for underwriting
2. pay 4.35m of stock to ensure that the proposed directors would be gifted $2.4m of free stock plus the first 100m shares of heavily discounted stock
I haven't bothered checking out the directors remuneration policies of this firm but its quite likely a great laugh too.
Cheers, Geoff
Mayne Report: we're certainly aiming to attend the upcoming Nexus AGM, but no details have been released yet. However, it should be pointed out that distressed companies sometime face punitive terms when attracting new investors and this sounds like a good example.
Companies worth more than $10m we'd love to own
Check out this list of more than 400 listed companies with a market capitalisation above $10 million that we don't own.
We're attempting to rectify the situation and have added 10 news stocks to the portfolio in this list of all our recent trades since you were last updated. For the first time, we've also explained the reason for the trades as follows:
October 2
Chemgenex: bought 715 at 70c (new stock)
Prime Media: bought 770 at 65.5c (Paul Ramsay, Lachlan Murdoch and Kerry Stokes are all in the mix, so we had to buy it)
ARB Corp: bought 109 at $4.60 (new stock)
October 1
Macquarie Airports: bought 348 at $2.88 (added Paula, the wonderful wife, to the register for a second crack at entitlement offer overs)
Fairfax Media: sold 310 at $1.68 (Paula selling down to the normal 10 shares)
Ampella Mining: sold 1,310 at 57c (exiting a tiddler which left the door open but didn't deliver)
Campbell Brothers: bought 16 at $31.66 (getting on register for rights issue given door left open)
Lynas Corp: bought 741 at 67c (missed entitlement offer but need to be on register given FIRB blocked Chinese takeover)
September 29
Moly Mines: bought 995 at $1.03 (added Paula for second crack at Twiggy's vaguely promised capital raising)
Skilled Group: sold 666 at $2.05 (exiting scaled back share purchase plan)
Antares Energy: sold 1,590 at 24.5c (exiting a tiddler which left the door open but didn't deliver)
Spotless: sold 6,945 at $2.54 (exiting share purchase plan play)
Energy & Minerals Aust: sold 19,450 options at 7.2c ($1440 windfall on options hadn't even noticed from capital raising play)
Oncard: sold 3,090 at 18c (exiting one of two holdings - no need to double up)
September 28
Amcor: sold 80 at $5.51 (exiting scaled back entitlement offer)
Brambles: sold 83 at $7.91 (exiting one of three holdings given tipped capital raising appears unlikely to materialise)
Westfield: sold 46 at $13.41 (exiting one of three holdings given tipped capital raising appears unlikely to materialise)
The Rock: bought 200 at $2.50 (new holding)
Extract Resources: bought 56 at $8.97 (capped at $2 billion, so should have been on register long ago)
September 25
Goodman Group: sold 1150 at 59c (exiting one of three holdings after capital raising play completed)
September 23
Bass Strait Oil: bought 17,421 at 5.8c (getting on board given door left open with capital raising)
September 22
AWB: bought 345 at $1.46 (picked up second holding just in time given SMH tipped capital raising the day before it happened)
Bank of Queensland: sold 799 at $10.81 (exiting capital raising play)
MacArthur Cook Industrial Fund: bought 1789 at 28c (on board for hostile EGM proxy battle, but was too late)
Milton Corporation: bought 30 at $17.04 (new holding and AGM coming up but never on register)
Sedgman Ltd: sold 2,692 at $1.69 (exiting capital raising play)
Traffic Technologies: bought 8621 at 5.8c (getting on register for EGM proxy stoush)
Check out this complete alphabetical list of our dealings in almost 800 companies over the years although beware there are quite a number of gaps. Also, go here for the full portfolio and trading histories sliced and diced in a variety of interesting ways.
The goal now is to push the portfolio up towards 1000 stocks so here are the buy orders we placed on Friday:
Most recent Mayne Report editons
Sign up here to receive the weekly Mayne Report member editions for free and you can see an archive of all editions from 2008 and 2007.
If you've only just got on board or missed some recent missives, try these for size:
September - 4 editions
Compass, MAP, dodgy SPPs, exec pay, Mirrabooka AGM, Manningham, capital raisings, Rich List and much more
September 26, 2009
Fairfax, RACV elections, MAP, capital raisings, Manningham, Wallis, hostile EGMs, video, AGM diary, rich list and much more
September 22, 2009
Bad Bendigo, Mark Day, Manningham, pokies, NAB, Asciano, Rich List, Paladin, hostile EGMs and much more
September 15, 2009
Elders rip-off, NAB excuses, Woolies grog push, Virgin scale back, Australand windfall, McCrann, Walkleys, activism, Macek, AMP and much more
September 8, 2009
August - 4 editions
Come along tomorrow, Fairfax article, profit season, Business View, Australand looks good and NAB scandal
August 28, 2009
NAB shafting, capital raisings, pokies, council taxes, REA Group, Laker, Richies and much more
August 25, 2009
Manningham, bank bashing, capital raisings, Fairfax, Asciano, NAB, McCrann, Charlie Aitken, developers and much more
August 17, 2009
Macquarie, Trevor Rowe, capital raisings, Murdoch, Rich List, Qld In and much more
August 7, 2009
The latest capital raising plays
Check out this complete chronological list of all capital raising plays in 2009 and at the bottom is a list of the 20 or so upcoming offers.
There's also this version ranking the top 50-plus plays since January. For the latest shuffles in our ridiculously large tiny share portfolio, check out all trades in 2009 plus the full portfolio of more than 700 holdings.
September finished up with a gross gain of $32,229 after three successful plays last Monday which unfolded as follows:
September 29
Skilled Engineering: $15,000 into SPP at $1.50 but scaled back to 666 shares worth $1000 and sold at $2.05 for a $366 profit.
Spotless: $15,000 into SPP at $2.16. No scale back and sold at $2.54 for a gross profit of $2642.
EMA: belatedly exited options hadn't noticed from earlier offer to collect $1440.
Meanwhile, here is the list of applications we've currently got out there for capital raising offers:
CMA Corp: $4500 into $15,000 SPP at 10c which closes October 8 and trades October 20.
Cougar Energy: $20,000 into two $15,000 SPP entitlements at 8.25c. Trades October 6.
Elders: $600 so far into two $20,000 SPP entitlements at 15c. Closes on October 23 and trades November 3.
Folkestone: $7,200 into 2-for-1 entitlement offer at 15c with ability to apply for extra. Trades October 7.
Gunns: $18,000 into entitlement offer at 90c. Scale back flagged with details to come and trades October 8.
Healthscope: $15,000 into SPP at $4.19. Closed October 1 and trades October 13.
Industrea: $5000 so far into $15,000 SPP at 42c or 5% discount. Closes October 9 and trades October 14.
Isoft: full $15,000 into SPP at 5% discount to market. Closes October 6 and trades October 15.
Ramsay Healthcare: $35,000 into three $15,000 SPP offers at $9.835 but scaled back to $3000. Trades October 8.
Real Estate Capital Partners: $7000 so far into $15,000 SPP at 15c or 7.5% discount. Closes October 9 and trades on October 21.
TFS Corp: $2000 into $15,000 SPP at $1 or market price which closed October 2 and trades October 16.
Watpac: $4000 so far into three $15,000 SPPs at $1.25 after placement. Closes October 12 and trades October 23.
Total live applications: $133,300
A belated new addition to $100m loss club
The 2008-09 reporting season was the worst we've ever seen. Here's a chronological list of how the 53 losses above $100 million were rolled out, and below is the last entry which was released a month after everyone else:
September 30
Hedley Leisure & Gaming Fund: declared a $178 million loss for the full year after hefty write-downs which reduced claimed net assets from $326 million to $160 million when the market capitalisation is down below $50 million.
The Mayne Report Rich List
Since we began compiling the Mayne Report Rich List documenting every Australian currently or previously worth more then $10 million, it has grown in numbers and popularity such that no other feature on our website can match it for traffic. These are the three most popular articles on our site, and as you can see, the Mayne Report Rich List is more than double its closest rival.
The Mayne Report Rich List
Page Views 60,170
Visits 51,061
Share transactions so far in 2009
Page Views 27,633
Visits 24,713
The 2009 capital raising plays
Page Views 24,368
Visits 22,133
Let us introduce to you our 1400th member...
Ash Hunter: owner of the Hunter 5 group of companies which owns Just Magazines Publishing a classifieds listings service for used vehicles and other equipment. Started by his father in 1989, readership has grown to more than 200,000, which has pushed his personal fortune beyond $55 million.
Mayne Report video blog
ABC TV Compass
What Should I Do? - Part 1
Once upon a time the big decisions in life were about births, deaths and marriages. But today many of our little, everyday decisions have grown into big dilemmas. Check out some of the ethical debates that were featured on Compass eight days ago.
We have put together playlists of videos covering similar topics and additionally, collections of videos from television appearances. Check out these special edition videos here.
Press room and podcasts
Below are this week's contributions:
Radio
720 ABC Perth discussing executive pay reforms.
774 ABC Melbourne: discussing the Myer float, interest rates and the world of finance with Libby Gore.
666 ABC Canberra: talking about corporate governance, executive pay and the corporate governance lecture at the University of Canberra.
Crikey
Fairfax recruit exposes the no vacancy rort being used by Fairfax
October 2, 2009
When will News expose the Evans/Fairfax conflict, Terry?
September 29, 2009
Corporates clear the ASX trash on Grand Final Eve
September 28, 2009
Click the link above to get the latest radio and AGM audio.
Mayne Report RSS Feeds
The Mayne Report now has RSS feeds for you. We have bundled our best articles into a simple and easy delivery for you. Add an RSS feed to your personal reader, iGoogle, MyYahoo, or blog. It's quick and easy to do and means you're always up to date with the latest Mayne Report activity.
Dividend cheques should be a thing of the past
Below is some email correspondance with Santos spinner Matt Doman about why they sent us a dividend cheque with no direct debit form:
Hi Matt, I'm on 700 registers and the vast majority of companies that don't have someone's bank account details for direct debit of dividends send a form with the dividend cheque until it is filled in. Some companies like AMP and Telstra are refusing to send cheques at all.
This week I got a dividend cheque with no direct debit form from Santos and suspect this has now happened a few times as I always opt for direct debit.
Could you please let me know the company policy and also the proportion of shareholders (if any) getting direct debits. How do you get them on direct debit and why the continuation of annoying cheques?
Cheers, Stephen Mayne
Sent: Friday, 2 October 2009 1:29 PM
To: stephen@maynereport.com
Subject: FW: cheques
Gday Stephen:
Our policy is that shareholders have three choices for receiving their dividends:
* Direct credit to a bank account;
* Dividend reinvestment plan, in which case they elect to receive new shares instead of cash;
* Cheque in the mail.
If shareholders elect to receive a cheque, they also receive a direct credit form and a reply paid envelope with their cheque. In this way, we are encouraging shareholders who want to receive cash to sign up for direct credit of dividends. However, we have not adopted the policy of some companies that refuse to offer cheques as there are still shareholders who are uncomfortable in providing their bank account details to companies.
As with all shareholders, you would have received a direct credit form and reply paid envelope with your dividend cheque.
For the recent interim dividend, the breakdown of payment methods to shareholders was:
Direct credit 57%
DRP 22%
Cheque 21%
Trust your well, Matt Doman
Hmmm, doesn't really answer the question but provides some interesting statistics all the same.
The Mayne Report traffic
The months of August and September were our best since inception in September 2007 and the details were as follows:
August 2009
137,261 page views
87,679 unique visits
The most popular article for the month was Ranking the 2009 SPP plays which had 9,556 page views followed closely by The 2009 capital raising plays which had 7,778 page views.
September 2009
133,298 page views
87,279 unique visits
The 2009 capital raising plays which had 7,448 page views this month was our most popular, followed by the Mayne Report Rich List with 3,543 page views.
Video
Our video blog had 12,924 page views in September with a spike of over 3,500 people on Tuesday, September 15, attributable to this Fairfax column on capital raisings. This is a healthy figure but doesn't match August where we had 13,649 viewers, with a spike of 7,300 on Friday, August 7, attributable to our seventh instalment on capital raisings for Fairfax websites and a strong Mayne Report email edition sent that day.
Sign up for Mayne Report Tweets
We have only been twittering for a few months, but now have 771 followers who have received 145 tweets. We are regularly dropping out the latest developments from AGMs, capital raising plays and even Manningham Council. Sign up below to get the latest updates from all our activity and check out our latest tweets since the last edition:
4:10pm Oct 1: Big Crikey story today on Fairfax and the no vacancy rort. Working on latest edition and capital raising profits drying up with scale backs.
5:56pm Sep 30: Interview on 720 ABC Perth about executive pay reforms http://bit.ly/HI8wj
7:19pm Sep 29: ASX AGM today in Sydney where we asked seven questions http://bit.ly/xHaAO
5:32pm Sep 29: 666 ABC Canberra talking about corporate governance, executive pay http://bit.ly/2go7Ml
1.42pm Sep 29: Heavy Ramsay Healthcare SPP scaleback. In Sydney for ASX AGM at 10.30am. Doing ABC Canberra at 10.45. Very tired after late council meeting.
3:24pm Sep 28: Exited Spotless and Skilled Engineering SPPs along with overlooked EMA options for profit of $4400 to finish September up $32,229. Not bad.
8:36pm Sep 27: 774 ABC Melbourne discussing the Myer float, interest rates and the world of finance http://bit.ly/18rl02
5:54pm Sep 27: Amazing statement from Fairfax NEDs backing Ron and slagging Fairfaxes: http://imagesignal.comsec.c
5:02pm Sep 27: Heavy scale back from 15k to 1k by Skilled Engineering. Myer float is costing more than $110m. What a gravy train of hype. Buyer beware!
9:24pm Sep 27: Appearing on Compass at 10.05pm on ABC1 tonight and just sent this edition: http://bit.ly/aXB8S
The complete list of lists
The Mayne Report loves a good list and on this page we have a complete compilation with links to all of the offerings we've worked up over the past few years. Where available, we have included statistics on the popularity of each list.
Some nice feedback
Finally this week as we keep pounding away working up to 12 hours a day juggling council, shareholder activism, the talk circuit, radio and freelance commitments, it is nice to get the occasional piece of positive feedback such as the following from an ASX shareholder I've never met before:
Sent: Friday, 2 October 2009 1:02 PM
To: stephen@maynereport.com
Subject: Thanks
Stephen,
Just a quick note to say thanks and well done for asking the hard questions at the ASX AGM yesterday. In fact, well done all round. I'm a big fan of your work keeping corporate Australia on their toes.
In the 20 or so AGMs I've attended this year, I think you have been at the majority. Without a doubt, I and everyone else present admires the research you perform and thoughtful questions you level at the board.
Keep up the great work.
Regards, Andy
Sydney
Hmmm, who knows whether the long term goal of sitting on the ASX board helping make the rules to protect investors will ever come to fruition. One suspects not but we'll keep banging away.
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.