Huge backing at Centro Retail, discussions under way about joining board

February 2, 2010

Dear Mayne Reporters,

We're in new territory after the Centro Retail AGM this morning where a big vote in favour and this passionate campaign speech about being able to add some value in the hour of need has lead to discussions with the board about coming to some sort of accommodation.

The RiskMetrics recommendation certainly delivered a big vote as 435.3 million shares were voted in favour, compared with 1.258 billion against.

However, when you strip out the 1.1 billion Centro Retail shares controlled by other Centro funds that were voted, it is clear that more than 75% of the independent shareholders backed the candidacy. There hasn't been a vote like that before in 31 public company board tilts, so the shareholders have clearly spoken and the board is now listening.

I spoke to four directors, including chairman Paul Cooper and CEO Glenn Rufrano, after the meeting and we're going to see how things play out at the Centro Properties Group AGM tomorrow morning. The two Centros have had the notorious mirror boards since Centro Retail was floated in 2005 and at least today's AGM confirmed the re-appointment of a first independent director in South African property player Avin Lieberman.

Apart from criticising the governance, performance and mirror boards, the basic pitch to the shareholders was that I've dealt with many of the key players who are deciding Centro's future at the moment ahead of the big bank rollover deadline on December 15. It's obviously too late to join the board before that big decision, but if the long-term rollover is secured as the board hopes, then they will pursue new directors through head hunters Egon Zender and we're going to at the very least have a chat.

Paul Cooper has been pretty cool in a crisis and hasn't attempted to defend the indefensible. Whilst three of the Centro Retail directors have tendered their resignations, he has persuaded them to stay to promote a picture of stability to the banks ahead of the refinancing decision.

My pitch about knowing many of the players included mentions of litigation funder IMF and Slater & Gordon. Each has launched separate class actions against Centro and I've attended both of their AGMs over the past few weeks. I sometimes exchange emails with those guys suggesting different possible class actions and did collaborate with IMF managing director John Walker at the ABC Learning creditors meeting in Brisbane last week.

If appointed to the Centro Retail board, the obvious push would be to forcefully put the hard word on IMF and Slaters to focus their attention on other targets such as ABC Learning, Toll Holdings, Babcock & Brown and the like, whilst leaving Centro to get on with the business of managing what is still a great portfolio of shopping centres saddled with too much debt. Sure, it might involve a settlement, but quickly resolving issues such as the class actions is something that would be worth pursuing.

Finally, here are the edited audio highlights from the Centro Retail AGM:

1. This is serious - I could add some value to your board

2. Avin Lieberman election debate

3. Peter Wilkinson's re-election and connections to former CEO Andrew Scott

4. Why the parent should vote down the remuneration report

Combative Don Argus at BHP Billiton AGM

After making a passionate speech to join the Centro Retail board and getting a much higher than expected vote in favour, it would have been a very poor look to scurry straight out the door for the Woolworths AGM 100 metres away at the Convention Centre, followed by the BHP Billiton AGM at Melbourne Park.

Amazingly, there was only two very minor contributions from other shareholders at the Centro Retail AGM so it was all done and dusted after little more than an hour. The Australian Shareholders Association didn't even turn up so clearly most of Melbourne's shareholder brigade were at the Woolies and BHP AGMs.

After spending almost an hour talking to Centro shareholders, directors and even Sky News, I left Jeff's Shed at about midday to head across for Woolworths but then called staffer Shane who was monitoring both webcasts and he warned BHP Billiton was already onto the director elections.

Sadly, the Woolies appearance had to be abandoned and it was straight into a cab to Melbourne Park for BHP.

Apparently four shareholders, including former Federal Minister Chris Schacht, got up to speak on resolutions 17 and 18 concering my nomination but I literally walked in the door when chairman Don Argus was wrapping up the 15 minutes of debate and moving on to the next resolutions dealing with former Westpac CEO David Morgan's re-election.

So, the bloke who wasn't there to deliver his own campaign speech was first at the microphone for the next candidate and rather cheekily asked if Dr Morgan would be available to step and become chairman given that the incumbent's record was decidedly mixed and he was getting a bit long in the tooth.

Don't Argue was his usual combative self, interrupting regularly and not allowing Dr Morgan to answer the questions himself. Have a listen to that exchange.

There was another two contributions during the formal business which produced some interesting answers as Don't Argue basically killed any suggestion of collapsing the dual listed company structure and then also engaged aggressively on the vexed issue of termination payouts after I presented his own dreadful record to the meeting as the Australian king of payouts.

General business didn't kick off until about three hours into proceedings and it dragged on for almost two more hours as at least 20 more shareholders took to the microphone, many of them raising environmental, indigenous, safety and uranium issues. There was even an action group from the Philippines handing out flyers and criticising The Big Australian's practices.

The final skirmish with Don Argus was perhaps the most interesting as he equivocated about standing for re-election again next year and then aggressively defended the Billiton merger after I quoted Alan Kohler at him and suggested the combined loss of shareholder value from Billiton and Rio Tinto would have been about $70 billion.

Watch the video of this exchange as Don keeps on pointing to a slide showing strong share price performance.

Edited audio highlights from BHP AGM

Chairman Don Argus encourages shareholders to vote against my election

Support from four shareholders after unfortunate no show

Supporting David Morgan for re-election and proposing him for chairman

Has Don Argus learnt anything from his dreadful record on CEO payouts?

It is ridiculous that the CEO is paid more than the entire board

Are we going to collapse the DLC and buy back all those London listed shares?

Final combat with Don't Argue over his retirement plans and the hugely destructive Billiton merger and Rio proposal takes it to Woolies

Anti-pokies campaigner Paul Bendat did himself proud putting Woolies through the ringer over their appalling pokies division at today's AGM.

Have a listen to his two contributions courtesy of the website and stand by for plenty more pressure on Australia's biggest retailer and the nation's biggest pokies operator:

Get the kids out of your venues, this is not family entertainment

Show some leadership on problem gambling rather than milking addicts all the way

That's all for now.

I'm off to The Walkleys at Crown, which hopefully won't see a repeat of Glenn Milne's drunken assault in the same venue two years ago.

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.