Ten tilt, mayoralty vote, David Jones audio, Seek AGM audio and some other odds and sods

February 19, 2010

Dear Mayne Reporters,

greetings from Sydney Airport after failed public company board tilt number 38 at the AGM of Ten Network Holdings this morning.

And it's fair to say my numbers certainly didn't come up at Star City Casino with only a miserable 6 million shares voted in favour compared with 780 million against. Oh dear, that's not even 1%, the second worst result ever and easily the worst score when tilting at a company with an open share register. Check out the results here.

However, perhaps one aspect to consider is that some of the same institutions who voted against me today specifically benefitted from the selective institutional placement without the normal accompanying share purchase plan for retail investors that I was complaining about.

Despite the poor vote, the debate and rhetorical dressing at the AGM was one of the best in a while. The board were smacked around on all manner of things and we even had billionaire Bruce Gordon standing up from the floor in response to some comments I made and declaring that as the largest shareholder with up to $400 million invested, he would like to have an independent director on the Ten board. This will never happen because Gordon's Win Group competes directly with Ten through its ownership of Channel Nine in Perth and Adelaide.

The only reason for today's board tilt was Ten's continuing refusal to do any form of share purchase plan after the discounted $138 million placement at $1.15 a share earlier this year.

However, it wasn't until I sat down at the AGM and looked at the notice of meeting did I realise there had been a double shafting: the detailed platform submitted had been whittled back to just two miserable paragraphs and the board employed the no vacancy rort, declaring there was three candidates for only two vacancies.

Talk about a red rag to a bull. The mood wasn't great to start with having only had 5 hours sleep after a great evening with 350 of Melbourne's finest at the RACV President's Christmas Dinner the night before. And with a few rockets going off after the 5-4 Manningham mayoral vote on Monday night, I was really in combat mood on discovering Ten's contempt for a proper democratic process.

The hostilities ended up dragging on between me and the board for about 50 minutes of the 80 minute meeting, which is the first time Ten's AGM has lasted more than an hour since we last caught up at the 2000 AGM in Melbourne.

Executive chairman Nick Falloon commented afterwards that I was far more aggressive than expected but he was still big enough to come up for a chat, as was CEO Grant Blackley - who said nothing during the meeting - and programming director David Mott who had copped a spray for allegedly never being able to make a bold decision.

Falloon strongly rejected the notion Mott was a ditherer or the company failed to invest for the long term, although he didn't resist as strongly when I suggested it had failed to properly prosecute a long term digital strategy during the period when teetering controlling shareholder Canwest was bleeding the company of every available dollar through dividends.

Strange board indeed

The slimmed down five man Ten board is a strange beast with Falloon sitting there as executive chairman on a big seven figure package supposedly only doing three days a week and with no immediate plans to step down for an independent replacement, even though CanWest departed the scene a few months back. This makes Falloon the only executive chairman of a top 150 company who isn't a founder like Kerry Stokes, Frank Lowy or Rupert Murdoch.

The Falloon pay packet and his record of twice building up shareholdings and then opportunistically selling down has antagonised some investors and might explain why 135 million shares were voted against the remuneration report, although there was still 631 million in favour.

Based on the way Falloon has been treating shareholders, this company desperately needs some new independent directors who understand the basic inequity of special share placements to the big end of town without any comparable offer to its 22,000 retail shareholders.

The two other directors up for election today were both asked for their opinions on the SPP and only Hungry Jack Cowen, an original 5% shareholder in the CanWest consortium back in 1992, took the bait and came up with the same complete waffle as Falloon about the need for a speedy raising at the time and the lack of any need for capital today.

This is a company with $400 million in debts which has suspended dividends payments and, in Falloon's own words, was perceived to be potentially heading towards a breach of its banking covenants at the height of the GFC. How on earth would even a $5000 SPP at a 10% discount capped at $30 million possibly leave such a beast with excess capital?

John Studdy was the other director up for election today and he refused to engage when quizzed about his age and the SPP. At 80 years old he is Australia's oldest NED and it is bizarre that he is still hanging around. I rather rudely suggested it was "pipe and slippers time" to both a favourite phrase from Sydney Morning Herald business editor Michael West.

Catching up with the Bermudan-based billionaire and Hungry Jack

It was certainly good to see Bruce Gordon in full swing today and I congratulated him after the meeting for being the first Australian (okay, he technically lives in Bermuda) billionaire to get up and speak on the floor of an AGM. The lad predicted Ten would have a great 2010 and said he had a cordial relationship with the company, even without that coveted board seat.

The other Rich Lister on display today was Hungry Jack Cowin, the Canadian-born fast food mogul who owns hundreds of KFC and Hungry Jacks stores in Australia along with 27% of Dominos Pizza and close to 40% of the Sydney Harbour Bridgeclimb business. Who would have thought getting tourists to pay to climb the Sydney Harbour bridge would end up generating a staggering $16 million a year in profit, whilst the authorities only cream off an access fee of about $4 million a year.

Maybe the financially-troubled NSW Labor government should look at renegotiating the agreement which has made a fortune for Hungry Jack and the two other major shareholders, Brett Blundy and founder Paul Cave.

David Jones AGM highlights

After attending the lively David Jones AGM in Melbourne on November 30 we've now got the edited audio highlights. You can listen to all our questions in one edited file or sample the indidivual exchanges as follows:

Webcasting the AGM next year? Currency hedging. Are we still outperforming Myer at Doncaster? And are there any sites we cannot get because of restrictive lease covenants?

Could you talk more about the Myer float and their media blitz and what it meant to us? Do you think they have damaged their brand because of the over hype and poor performance?

Fun and games with the re-election of Olymypic Supremo John Coates

Supporting the re-election of Katie Lahey and blasting the board for not having more female directors. Katie basically agreed

Remuneration report debate focusing on success of retention scheme and the CEO's shareholding

Grilling the legendary Bassat brothers at 2009 Seek AGM

After attending the Seek AGM at James Packer's Crown Casino on November 30 we've now got the edited audio highlights. You can listen to all the questions in one file or individual exchanges below:

What on earth was James Packer doing dumping the stock and is there now a takeover premium in the share price?

What is the long term plan internationally? How do you compare internationally in terms of market cap?

Are you cleaning up Fairfax or will their board changes make them a more formidable opponent?

Where is the industry at relative to your strategy? Do we have any preference of old media partner in terms of promoting our businesses or are we strong enough on our own?

Well done on your conservative cash payments and could you talk about the small protest on the remuneration report?

It would be better to have a couple more independents and a couple more women on your board to have better diversity representing the community

In light of the sensational performance please disregard the small protest vote and lock-in the Bassats as part of our long term plans

Good feedback from speech to LGPro

The talk circuit commitments continue apace and last Friday there was an address to about 160 local government officials, including the CEOs of 18 Victorian councils, at Melbourne's Hilton on the Park for the end of year function put on by LGPro. It seemed to go down well and David Preiss, the CEO of LGPro, has sent through the following feedback:

Dear Stephen,

Just a note to thank you most sincerely for presenting at our Business Lunch held at Hilton on the Park last week. The feedback received was very positive. A number of LGPro members comments on the value of the message you delivered and its relevance to the local government sector and to them personally.

We are most appreciative of your involvement and for delivering a presentation ensuring our event was a valuable experience for all those who attended.

Once again, many thanks for your contribution.

Yours Sincerely
David Preiss
LGPro (Local Government Professionals)

The Cornwall collection

Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing his satirical commentary to The Mayne Report since March. Here is a collection of his best cartoons and there are now also some amusing animations.

Donate to help keep this free service (plus pay for a few flights to AGMs)

The Mayne Report costs almost $100,000 a year to run (assuming I don't get paid a salary) and we moved to a free model in June, after struggling along seeking subscriptions for the first 21 months as we racked up almost $200,000 in losses.

However, it has been nice to receive almost $4000 worth of donations over the past four months and we're hoping this new model can help cover some of the start-up losses and ongoing operating expenses.

Thank you all for generously contributing and we've put together this honour roll for those who have donated which includes the following entries since the last edition:

December 8
Alisha: donated $100

December 7
George: donated $50
Stephen: donated $20

December 6
donated $100

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Mayoral vote and more Manningham Council audio

The 5-4 defeat in Monday night's mayoral ballot was explained in this Crikey story yesterday and we'll bring you the audio and more discussion in the next edition once the dust has settled.

Meanwhile, Manningham City Council held a public council meeting on November 24 and the most contested item of the night related to a 40 unit retirement village development on King St. It ended up passing 7-2 and you can listen to the full debate here.Check out the agenda and minutes. Below are links to edited audio of our other contributions to the public debate that night.

Supporting King St retirement village proposal

Giving long neglected land away in Eildon St

Spending millions on a new public park in Doncaster and getting ticked off by councillor Gough

Supporting the MAV's code of conduct for Manningham

Celebrating consolidation of Manningham Centre Association in our very strong accounts

Supporting the Manningham arts and culture policy

There's quite a big agenda for next week's final council meeting of the year and the proposed review of the Manningham Centre Association nursing home operation will be a potentially controversial item.

The Mayne Report Rich List

BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1400 names with those who've fallen back below $10 million now italicised. Below are our latest new or updated entries:

Angela Bennett: sister of Michael Wright, she is part of the heirs to the huge Hancock-Wright Pilbara iron-ore royalty which delivers about $40 million a year. She sold her sprawling mansion in Mosman Park, WA, in December 2009 for a new Australian record price of $57.5 million. The BRW claims $1.78 billion.

Roy Spagnolo:
the Parramatta Eels chairman is quite a property player and sold an industrial site tenanted to Bunnings in the Sydney suburb of Rockdale for $25 million in 2009. The AFR reported that Roy is known for his links with “the Italian Connection”, a group of Sydney developers including Tony Zappia, Vince Lombardo and George Gaitanos.

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. Here is a collection of his best cartoons and there are now also some amusing animations. Check out some of his latest offerings throughout the edition:

Capital raising plays

There hasn't been much action on the capital raising front since the last edition but here is an update of the applications we've currently made, along with a couple that closed out with no material result:

Amalgamated Holdings: $15,000 into 1-for-5 entitlement offer at $4.10 with overs. Scaled back to virtually nothing.
ANZ: $20,000 into convertible prefs offer yielding 3.1% above bank bill rate. Closes December 10 and trades December 23.
AMCIL: $10,000 into $15,000 SPP at 64c which closed December 4 and trades December 11.
Clean Seas Tuna: $3000 so far into three $15,000 SPPs at 25c which closes December 18 and trades December 23.
Moly Mines: $45,000 into three $15,000 SPP entitlements at 80c. Scaled back to $23,400 and exited at 82c to post negligible profit.
Penrice Soda: $14,000 into 1-for-2 entitlement offer at 70c with overs but heavy scale back. Closed November 27 and trades December 8.
St Barbara Mines: $15,000 into 3-for-14 entitlement offer at 27c. Closed December 4 and trades December 15.
Tissue Therapies: $15,000 into SPP at 15c or 20% discount to VWAP. Closed December 4 and trades December 22.

All the recent share trades

Check out all the trades so far this year and here's the world's biggest small portfolio along with most of the recent trades below:

December 9
Cellestis: sold 147 at $3.33
Dromana Estate: sold 8,000 at 3.4c
Golden Gate Petrol: sold 14,287 at 3.6c
Liquefied Natural Gas: sold 390 at $1.05
Metgasco: sold 1,102 at 79c
Nomad Building: sold 675 at 65c
WDS Ltd: sold 303 at $1.70

December 8

CSR: sold 257 at $1.69
Moly Mines: sold 30,283 at 82c
Penrice: sold 516 at 80c
St Barabara: sold 1,565 at 33c
Tissue Therapies: sold 2,720 at 14.5c

December 7
Boom Logistics: bought 1,317 at 38c
Macquarie Media: sold 410 at $1.96
Transfield Services: sold 112 at $4.07

From the press room: Crikey, Businessday, ABC radio and RRR

2009 has been another year of heavy media engagement across a wide spectrum. Indeed, after spending two hours on RRR this morning doing Headley Gritter's The Party Show with fellow guests Nick Economou and Phil Cleary, you realise it is perhaps time to be a little less engaged with the fourth estate.

My favourite moment was calling the 74-year-old Tuckey a "reactionary dinosaur" and asking when he would finally retire from now less safe seat of O'Connor but it didn't seem to register and he just kept spouting garbage whilst promoting some climate change gumph on his website.

Listen to the exchanges here: RRR Melbourne: The Party Show, December 5, 2009

Meanwhile, there was also this interview in Tasmania today:

936 ABC Hobart - talking to Tim Cox about corporate puppy ASIC and the upcoming Ten Network AGM.


Mayne: How I was denied the Manningham mayoral robes
Wednesday, 9 December 2009

The Age

A serial stander
Mark Hawthorne, December 9, 2009

Click the link below to get the latest radio and AGM audio:

Mayne Report video blog

We have added more playlists to this collection of special edition videos. Check out the new News Corp playlist and the Super Ratings Conference speech. Watch these special edition videos here.

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Sign up for Mayne Report Tweets

We have only been twittering for a few months, but now have 937 followers and 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 some of the latest tweets :

9.25pm Dec 10 ABC Hobart this morning discussing ASIC and today's Ten Network AGM http://video.maynereport.com/audio/936_101209.mp3

7.54pm Dec 10 Just landed in Sydney for Channel Ten board tilt. RACV President's dinner last night. Great to catch up with our guests Thornley and Trioli.

2.34pm Dec 9 Have written a strong piece for today's Crikey email edition on 5-4 mayoral defeat and Labor factionalism. See: http://www.maynereport.com

8.54am Dec 8
The Age have run this story on 5-4 mayoral defeat: http://www.smh.com.au/business/top-bank-tell-em-theyre-dreaming-20091208-khp9.html

12.23am Dec 8 Just back from AGM of council where incumbent Labor mayor Charles Pick confirmed for second term. Lost informal ballot 5-4. Oh well.

12.43pm Dec 6 Just knocked back Telstra-bashing exercise with A Current Affair - a rare event for a media tart. Focusing on mayoral horse-trading today.

9.08pm Dec 5 Was 4 weeks between full editions, but do check out this bumper offering: http://www.maynereport.com/articles/2009/11/10-1624-651.html

pm Dec 4 Doing RRR's Party Show year ender with Headley Gritter from midnight until 2am. Sucker for punishment. Phil Cleary one of the other guests.

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.