Turbulence at Skywest

[Wirraway]

Fri "The Australian"

Turbulence at Skywest
By Geoffrey Thomas
July 02, 2004

THIS week's very public attempt to dump Skywest Airlines chairman Pat Ryan is just the tip of deep-rooted problems that have plagued Perth-based Skywest Airlines since it flew out of receivership in 2002.

An extraordinary general meeting of the company's 200 shareholders was called on Monday by Singapore-based Captive Vision Capital (CVC), the airline's largest shareholder, which is attempting to take control of the airline in an $11million bid.

The bid to oust Mr Ryan failed, in part because CVC was unable to use proxies for shares it was in the process of acquiring.

CVC has 28.5 per cent of the shares and is in negotiations with more key shareholders, according to some shareholders.

At Monday's EGM, a CVC spokesman claimed that Skywest was not "being properly managed" and that CVC expected to take over the airline.

Skywest's board has urged shareholders to reject the bid, which it says undervalues the airline's potential despite last week's massive profit downgrade from $2.4 million to just $700,000.

Mr Ryan blamed a series of one-off events for the downgrade, including "fuel price increases, underestimating costs associated with the May introduction of the airline's second jet and a payout to former CEO Bill Meeke", who was dumped by the airline in July 2002 over the direction of the airline.

The massive reversal came after a $1.8 million audited profit for the first half of the financial year.

For the year to June 30, 2003, the airline posted a $546,000 net profit, which was boosted by a $3.7 million gain from the restructure of the lease liability on the company's fleet of Fokker 50 aircraft.

Skywest operates a fleet of five 46-seat Fokker 50s and two Fokker 100 jets.

The airline's board has argued that the airline has excellent growth prospects but these are heavily dependent on services that compete directly with Qantas and QantasLink.

This fact is borne out in accountant PricewaterhouseCoopers' assessment that Skywest's undisclosed 2005 profit forecast is "heavily dependent" on the success of these services to destinations such as Broome, Karratha, Port Hedland and Bali.

History shows that the northwest of Western Australia is a graveyard when an airline does not control the enormous resource of "fly in, fly out" travel contracts.

East-West Airlines failed in 1985, Ansett planned to abandon Western Australia completely in July 2001 because it could not match the competition from QantasLink, while QantasLink itself withdrew from Port Hedland in the late 1990s when it failed to secure the BHP contract. Ansett, Garuda and Merpati have all tried and failed to operate between Port Hedland, Broome and Bali.

In the resource area, apart from Argyle all the major long-term contracts have been secured by QantasLink, National Jet Systems (NJS) and Skippers Aviation.

The Argyle contract expires in October 2005 and Qantas is known to be "extremely keen to win" that back with a Boeing 737.

Qantas won the contract after Ansett's collapse but lost it when it was unable to provide an aircraft to suit Argyle's evening shift changes.

Shareholders also query Skywest's declared load factor of just 57.5 per cent from its December quarterly report, as the industry standard for break-even is about 65per cent for regional airlines, while airlines such as Qantas and Virgin Blue have load factors in the 75 to 80 per cent range.

"It is not as if the airline has any business class traffic to boost yield," said one shareholder.

Skywest chief executive Scott Henderson argues, however, that the airline has "very low lease costs on its Fokker 100 jets", while staff have taken significant pay cuts.

Chairman Pat Ryan has been upbeat on the future.

"Loads are getting better on the new routes," Mr Ryan said.

And the move to operate from Perth to Exmouth with jets appears to be paying off with good passenger numbers, say insiders.

Sydney-based industry consultants raise concerns that Skywest's new maintenance policy "increases the possibility of nasty balance sheet surprises".

Most airlines practise what is termed "power by the hour", where full provision is made on a monthly basis for a range of maintenance areas, including engines and undercarriages, but consultants say Skywest may not be making enough provision.

A major overhaul on a Fokker 50 can cost up to $700,000, while repainting the four Fokker 50s that still bear the scars of the Ansett days will cost about $70,000 each.

CVC's bid of 20c a share is at the bottom end of a valuation prepared by PWC of between 19.5c and 28.6c and is described as "reasonable but not fair".

But one Melbourne-based airline industry analyst suggested the CVC offer was "very fair" and offered existing shareholders a profit on their original investment.

Mr Ryan says the airline is still committed to listing on the Australian Stock Exchange, although he concedes that the process has been slowed by the profit downgrade. And the success of that float is questionable after the lacklustre performance of Virgin Blue's stock, which has moved little off its issue price.

Late last year Skywest sounded out both Qantas and Virgin Blue on buying a stake in the airline but was rejected. Relations with one-time frequent flyer partner Qantas soured earlier this year after Skywest elected to compete directly on the Perth-Karratha and Perth-Port Hedland routes.

In May, Qantas served notice on Skywest of the termination of the frequent flyer and interline relationship, and Skywest quickly hit back with a deal with Emirates.

Another cloud on the horizon is the West Australian Government's decision to put out to tender later this year Skywest's monopoly routes to destinations such as Albany and Esperance. On these routes Skywest uses 46-seat Fokker 50 turbo-props.

Sources in Sydney suggest that QantasLink would be interested in bidding for the routes, along with at least three Perth-based regional operators.

In a portent of what may transpire, Skywest lost its monopoly to Shark Bay and Monkey Mia late last year to low-cost Skippers Aviation, which was also allowed to compete on Skywest's most profitable turbo-prop route to Geraldton.

Competition on jet routes also looms from Virgin Blue, which now overnights up to four 737-800s in Perth. The airline has shown interest in operating from Perth to Broome, Kalgoorlie and Bali.

CVC was unable to comment at this stage of negotiations.

=========================================

[Fed up with Geoffrey]

Geoffrey Thomas, why don't you just leave us alone? We are just a bunch of guys and girls who work hard and have pride in what we do at SKywest. Each way we turn you are there doing your best to berate our efforts. You know so little about what really goes on.

We have been very tolerant, not mentioning publicly your personal connections with Skippers or Bill Meeke that continuously result in seriously slanted reporting.

We are the staff at Skywest and we have had enough. We are asking you to stop what you are doing now. Enough is enough.

[geoffrey thomas]

Fed up with Geoffrey:

Setting the record straight....

1. Certainly I do have a personal connection with Skippers through my partner's son.
2. Certainly I see Bill Meeke from time to time if I am in Sydney.

BUT what you do not know is.....I have a relative working for Skywest plus one colleague.

When you have been involved in this industry for 30 years it is impossible not to have friends and possibly even relatives involved and of course I must talk to a host of people to be able to report on the industry. Many of them become industry friends over time.

Your challenge is to find anything in that story or any other I have written about Skywest that is incorrect. The reality is that I have written hardly anything about Skywest in months nor have I covered the many recent successes of Skippers Aviation.

In fact you will find a host of times that I have not reported what I could have about Skywest.

It is Skywest that downgraded its profit not me and I am not the one trying to take the airline over…that is news and must be reported.

And why aren’t you critical of the West’s extensive coverage of Skywest’s problems? Six stories in two weeks—far more than me!

GT

[Wirraway]

Sat "Weekend Australian"

Skywest axes CFO after leak claims
By Steve Creedy and Geoff Thomas
July 03, 2004

PERTH-BASED regional airline Skywest has sacked chief financial officer Craig Lovelady and hopes to head off an $11 million takeover bid after claims confidential information was emailed to its Singaporean suitor, CaptiveVision Capital.

Skywest claimed Mr Lovelady's employment was terminated after unauthorised emails containing confidential financial information were sent to an email address belonging to CVC director and major shareholder Jeff Chatfield.

The airline has engaged an independent forensic information technology specialist to help it investigate the breach and was yesterday taking legal advice on referring the matter to the Australian Securities & Investments Commission and the Takeovers Panel.

Singapore-based CVC, which is seeking control of Skywest through a 20c a share takeover offer, made an unsuccessful attempt earlier this week to depose chairman Pat Ryan.

Mr Ryan said yesterday he could not elaborate on the nature of the information allegedly sent but the leak had "ramifications under the Corporations Act". There was no evidence of any wrongdoing by CVC last night.

"I'm not really at liberty to go into the level of detail but it was very confidential information," he said. "Indeed, it had been released before it was presented to the board."

Skywest's board has recommended shareholders reject the CVC bid. It says the offer undervalues the potential of the airline, which is committed to a listing on the Australian Stock Exchange.

The CVC bid was given impetus last week when the airline was rocked by a savage profit downgrade that slashed forecast earnings from $2.4 million to $700,000.

Mr Ryan said the airline had sought advice about asking the Takeovers Panel to re-examine the CVC bid, which expires on July 16.

But he said there might be other evidence still being collected by the forensic IT investigation that the airline wanted to put before the panel.

"As you know, one of the fundamental principles behind the takeover provisions of the Corporations Law is that the bidder may not be in a superior position as far as knowledge, compared with other shareholders," Mr Ryan said.

"What this goes to is that we have strong grounds to put to the Takeovers Panel that say that hasn't been the case."

CVC's Mr Chatfield said the company did not get any information that it was not entitled to.

In a related development, Singapore-listed A-Sonic Aerospace is to take a 32 per cent stake in CVC through its wholly owned subsidiary Janco International.

Listed eight years ago, A-Sonic specialises in aircraft retrofitting and supplies avionics equipment to 60 airlines in 20 countries, including Singapore Airlines and Cathay Pacific.

==========================================

[Juliet Golf]

It would seem that "Fed up with Geoffrey" ought to find out what The West Australia's Michael Weir's connection with Skywest is. I think GT has gone light on Skywest from what I know has been/ is happening. (BTW we all knew of GT's connection with Skippers, he never made a secret of it)
Juliet

From "The West Australian" Saturday July 3.

Skywest sacks CFO over 'leaking' claim

MICHAEL WEIR



The bitter battle for Skywest took a sensational turn yesterday when the regional airline's chief financial officer was sacked after claims that he had leaked confidential information to the Singaporean company that is trying to take it over.

The Skywest board said the employment of Craig Lovelady had been terminated after a formal investigation found "a number of unauthorised emails containing confidential financial information of Skywest were sent to an email address confirmed as that of Jeff Chatfield, a director and major shareholder of CaptiveVision Capital".

Skywest chairman Pat Ryan said investigations would continue over the weekend and, depending on the outcome, a case could be put to the Australian Securities & Investments Commission as early as next week.

Lawyers for Mr Lovelady denied he had breached his conditions of employment and said he was preparing to launch wrongful dismissal and defamation proceedings.

"Craig's position is that any contact he had with CVC and Mr Chatfield was with the express authorisation of Scott Henderson, chief executive officer of Skywest," Hager & Partners' Rod Hager said.

Mr Chatfield denied he received unauthorised information and said the sacking of Mr Lovelady, a former co-director with Mr Chatfield at CVC, was payback for CVC's move last week to have Mr Ryan ousted from the Skywest board.

The move failed, with Mr Ryan receiving overwhelming shareholder support.

"Scott Henderson negotiated the (takeover) offer and stated that were an offer to be made at 20¢ he would recommend it to shareholders," Mr Chatfield said.

"Any and all communications from Skywest were with Mr Henderson's implied or express authority."

Mr Ryan said the company suspected information was leaking because of "the coincidence of the bid timing" in relation to work on Skywest's float prospectus.

Following the launch of the bid Skywest was also concerned that some information being sent to its shareholders by CVC had not previously been made public.

Mr Ryan said an independent IT specialist had found a high degree of communication between Mr Lovelady and Mr Chatfield.

"Because of that we felt we had no choice but to ask Mr Lovelady to go on gardening leave," he said.

Mr Ryan said the company had retained Mr Lovelady's laptop. The company then decided to terminate his employment. Mr Lovelady's actions could lead to "very serious consequences in terms of corporations law".

"From our point of view to have a senior employee revealing the type of information to a third party, particularly a bidder, is the issue we are dealing with," he said.

"What, if anything, CVC did in relation to that information is for other people to enquire about."

Skywest has also given notice to CVC that the takeover conditions had been breached.

The employment of Mr Lovelady was among the many conditions set out in CVC's bid that could trigger its withdrawal.

But Mr Chatfield said the conditions "were CVC's conditions, and . . . for CVC's benefit, not Skywest".

CVC, Skywest's biggest shareholder with a 20 per cent stake, launched a 20¢ a share takeover bid for the regional airline in April. It has since increased its shareholding to 28.5 per cent under the bid, which closes on July 16.

The Skywest board has rejected the $11 million takeover based on independent expert PricewaterhouseCoopers' finding that the bid was reasonable but not fair.

The Skywest board has rejected the $11 million takover based on independent expert PricewaterhouseCoopers' finding that the bid was reasonable but not fair.

[Juliet Golf]

“The West Australian”
July 3rd

Sacked Lovelady no stranger to stoushes
RUTH WILLIAMS

Maverick broadcaster Derryn Hinch has several names for Craig Lovelady and Jeff Chatfield.

Mr Hinch, who worked for the pair when they were running Melbourne radio stations 3AK, published a lengthy tirade on the men he described as ignorant, crass boofheads in Melbourne’s Herald Sun newspaper, which was published just after the “boofheads” sacked him via email in December 2002.

He labeled them “a couple of hotshots from Perth and Singapore…so impressive I nicknamed them Tellytubby One and Tellytubby Two,” and said they wrote memos “you would guess were written by John Cleese.”

Aged just 39, the two former Hale School classmates are no strangers to board disputes.

They are best known for their time with struggling listed technology outfit Data & Commerce, which floated in late 2000 with grand plans to bid for licences in Australia, Asia and South America.

Mr Chatfield was DCL’s managing director and a substantial shareholder through his Singapore-based private company Advent, which owned 42 per cent of DCL and was in turn 36.6 per cent owned by Mr Chatfield. Kerry Packer’s Publishing and Broadcasting Limited was said to hold options and warrants in Advent.

Mr Lovelady a UWA graduate and chartered accountant, served as the company’s chief financial officer, secretary and an alternate director.

Mr Chatfield and Mr Lovelady assumed control of 3AK after DCL bought it in 2001. They proceeded to hire, then fire or lose, a string of high-profile announcers, including Greg Evans, John Blackman, Mr Hinch and former Victorian premier Jeff Kennett, who was tempted to the station in 2002 with a directorship and five million free shares.

Mr Kennetts’ nine-month stint at the station ended in February last year when he launched a stinging on-air blast at “station management”. He sold his DCL shares the same day to Southern Cross Broadcasting.

DCL’s woes continued that year when, in June, a board spat erupted between Mr Chatfield and fellow director and substantial shareholder Ron Hall. Both men moved for each other to be dumped but shareholders sided with Mr Hall.

Mr Lovelady, who Mr Chatfield appointed to the DCL board two days before the extraordinary meeting, stood down after less than a week as a DCL director after shareholders voted Mr Chatfield out.

Mr Lovelady is a former director of developer Axiom Properties. He joined the board in April 1996 ahead of its December float and was voted out two years later after disputing the merits of a proposed takeover supported by the other directors.



If this is all true one is left wondering what sort of checks Skywest management did on Lovelady or CVC before they invited them on board? No wonder they have problems!

Juliet

[Wirraway]

Fri "The Business Times online" (Singapore)
http://business-times.asia1.com.sg/story/0,4567,121372,00.html

Market yet to realise potential of A-Sonic deal
By VEN SREENIVASAN

A-SONIC Aerospace's shares slipped a cent to 38 cents in thin trading yesterday, despite the company saying it will buy an effective one-third stake in a profitable West Australian low-cost carrier.

Clearly, the market has yet to digest the full significance of this development.

A-Sonic is buying a 32 per cent stake in Singapore-registered investment firm CaptiveVision Capital (CVC), which has a 28.5 per cent stake in the carrier SkyWest and expects to take full control soon.

What is particularly interesting - and what the market may have missed - is that one of CVC's key shareholders is Crescent Venture Partners, a major shareholder in Malaysian budget carrier AirAsia.

Perth-based SkyWest is Western Australia's largest regional airline and flies cargo and passengers to 14 destinations, including its Perth-Bali flight. It has a high-capacity Air Operator's Certificate, giving it the right to operate international flights using larger aircraft.

A-Sonic is an established aviation retrofitting specialist that services more than 60 airlines in 20 countries and territories. It has a solid presence in China, with Air China, China Eastern Airlines and China Southern accounting for the lion's share of its revenue and earnings.

What the deal means - and what the market is missing - is this: A-Sonic has gained inexpensive entry to the burgeoning Asia-Pacific budget travel market via an existing profitable player. And through its network and presence in East Asia, A-Sonic can lead SkyWest into new and huge markets, where growth prospects are virtually limitless. And it is doing all of this in partnership with an established low-cost carrier - Malaysia's AirAsia.

==========================================

[slice]

Skywest Perth-Bali ????

[outback aviator]

we already do via Port Hedland on sat. nts.

[Wirraway]

Tues "The Australian"

Skywest dogfight no flight of fancy
By Geoffrey Thomas and David King
July 06, 2004

THE bitter takeover battle for West Australian airline Skywest has degenerated into a morass of claims, counter-claims and legal threats over unsubstantiated allegations a Skywest executive was passing secret information to the hostile bidder in hundreds of emails.

On Friday, Skywest chief financial officer Craig Lovelady was sacked over allegations that he sent highly confidential information about the airline to Singaporean bidder CaptiveVision Capital.

The allegation has been strenuously denied by Mr Lovelady, who is launching wrongful dismissal and defamation proceedings against Skywest.

Mr Lovelady's lawyer, Rod Hager of Hager & Partners, said any contact between his client and CVC was "with the express authorisation" of Skywest chief executive Scott Henderson.

CVC managing director Jeff Chatfield has also alleged that that Mr Henderson was aware of the information Mr Lovelady was passing to CVC.

But Mr Henderson said yesterday: "I want to make on the record an absolute denial of the claims that I in any way authorised the disclosure of any information.

"I am fully aware of the insider trading provisions of the Corporations Act," he added. "I simply would not condone such activity."

Mr Henderson said the emails had been sent to the Australian Securities & Investments Commission and the board was also considering taking the matter to the Takeovers Panel, which has the power to stop CVC's bid.

Mr Henderson said he would not be stepping down over the allegations and that he had the support of the board of Skywest.

Skywest chairman Pat Ryan said the company was bewildered by Mr Lovelady's statement that he had "express or implied authority" to pass on this confidential information to Mr Chatfield. "That is utterly untrue. Mr Lovelady had no authority, express, implied or otherwise, to send to Mr Chatfield confidential information that was not available to all shareholders and the market," he said.

Mr Henderson claimed the information passed to CVC included "profit estimates for financial year 2005, that have and will not be publicly disclosed to anyone".

He also alleged that the emails contained "statements that Mr Lovelady may join the CVC board after a successful bid for Skywest".

CVC, the airline's largest shareholder, launched its takeover bid in April at a price of 20c a share, which valued the unlisted airline at $11million. It says it has since raised its stake in Skywest to 30.2percent and owns, on a diluted basis, a further 12percent of Skywest by way of convertible notes and options.

"We are confident of gaining control of Skywest within the next few weeks," Mr Chatfield said.

Mr Chatfield claimed yesterday that Mr Henderson invited CVC's bid, priced it and told CVC he would recommend it to shareholders.

Mr Henderson said this was "completely untrue". Skywest's board has rejected the bid, telling shareholders the airline is worth up to 28.6c a share.

The sacking of Mr Lovelady is the latest in a series of dismissals and resignations that have rocked the airline since it rose from the ashes of Ansett in early 2002.

Founding chief executive Bill Meeke was dumped in July 2002 after a boardroom stoush, which has just been settled. Mike Calneggia, a founding director and shareholder, resigned in February 2002 and sold his shares. Former CFO Ian Drennan resigned before last year's capital raising.

==========================================

[Juliet Golf]

From "The West" July 6th

Suitor chased CFO for secrets: Skywest

MICHAEL WEIR

The Skywest takeover saga deepened yesterday when the regional airline claimed its hostile suitor sought and received confidential information about Skywest from sacked chief financial officer Craig Lovelady.

The allegations have been referred to the Australian Securities & Investments Commission and the Skywest board is also taking legal advice on whether to go to the Takeovers Panel.

The panel has the power to scrap Singaporean-based company CaptiveVision Capital's 20¢ a share offer if it determines the bidder was in receipt of information not generally available to other shareholders.

CVC has made steady inroads into the Skywest share register, yesterday revealing it had moved to 30.2 per cent of the airline's ordinary capital.

"The bid hasn't been declared unconditional, so my understanding (is) that those shareholders (who have accepted the offer) could receive their shares back," Skywest chief executive Scott Henderson said.

He said Skywest had evidence of emails where CVC managing director Jeff Chatfield had written to Mr Lovelady seeking information.

"It's our belief that the valuation of the company and details of the proposed float have been released to CVC, so they are aware much more of what the true value of the company is than we're allowed to tell our shareholders," he said.

Skywest yesterday called a media conference to disclose more details of the confidential information it claims was leaked to CVC before and during the current takeover bid by Mr Lovelady, who was sacked on Friday.

It said the information included profit estimates for 2005 and other detailed financial trading data that had not been publicly disclosed as well as a proposed draft by Mr Lovelady of a letter CVC would send to Skywest shareholders to persuade them to accept the bid.

The controversy has turned into a war of words with both sides denying allegations levelled against them.

Lawyers for Mr Lovelady said he had been open with Skywest about his previous business association with Mr Chatfield.

Hager & Partners' Rod Hager said Skywest had wanted Mr Lovelady to approach CVC in relation to a convertible note issue.

"Mr Lovelady denies giving any financial information of a confidential nature to CVC other than that which was authorised by Mr Henderson," he said.

"He certainly concedes and accepts that he had many discussions and contact with Mr Chatfield over the past two or three months, as you would expect."

Mr Chatfield said he had done "absolutely nothing wrong or improper".

"I categorically deny any impropriety on our part in the run-up to the bid," he said.

"We had lots of contact between Craig Lovelady, Scott Henderson and CVC and our investors at various times."

He said CVC was invited to bid by Mr Henderson and told a 20¢ offer would receive his blessing. However, this is denied by Mr Henderson.

"This is also completely untrue," he said. "If such an arrangement did exist, then you should ask CVC why this information was not disclosed in its bidder's statement for Skywest," he said.

"There was no mention of any such arrangement in the bidder's statement, because it did not happen."

Skywest said IT specialists had identified "several hundred" emails sent to Mr Chatfield by Mr Lovelady.

Chairman Pat Ryan said encryption software had been downloaded on Mr Lovelady's laptop computer and used to send encrypted emails to Mr Chatfield.

"A number of these emails are highly disturbing and indicate a rich vein of information flow from Mr Lovelady to Mr Chatfield," he said.

Skywest has rejected the CVC offer as opportunistic and too low. Independent expert PricewaterhouseCoopers has valued the company at between 20¢ and 29¢.



Skywest---"Disaster one day, catastrophe the next."

[Juliet Golf]

The West
July 7th

Pair no strangers to blues
RUTH WILLIAMS

Derryn Hinch calls them "Tellytubby One and Tellytubby Two", while John Blackman, of Hey Hey it's Saturday fame, describes them as the most Machiavellian businessmen he has ever encountered.

Perth-bred businessmen Jeff Chatfield and Craig Lovelady are embroiled in one of the juiciest corporate spats Perth has seen in some time.

The two shot to corporate prominence during their controversial tenures at Data & Commerce's Melbourne radio station, 3AK, which were marked by the hiring and subsequent departure of a string of high-profile announcers, including Blackman, Jeff Kennett and Hinch.

The events surrounding 3AK - made more explosive because there were big names involved - were followed closely by the media and received considerable coverage.

But while the Skywest affair may lack the names and has attracted less attention, it has far-reaching ramifications for the thousands of rural travellers serviced by the airline.

Mr Lovelady was sacked as chief finance officer of Skywest on Friday amid accusations by the group that he had leaked company information to his former associate, Mr Chatfield.

Mr Lovelady denies any impropriety and says that any comminication with Mr Chatfield was with the express authorisation of Skywest.

Mr Chatfield is managing director of CaptiveVision Capital (CVC), the Singaporean-based company trying to win Skywest through a hostile $11 million takeover offer.

Both 39, the duo attended Hale School and the University of Western Australia, and worked together at Mr Chatfield's unlisted Advent Television. Mr Lovelady is a qualified chartered accountant and former A-grade rugby player.

Mr Chatfield holds a Bachelor of Economics and a Masters of Economic Science from UWA.

Each has had a share of boardroom brawls, most notably with DCL, which was floated in late 2000 with Advent as a major shareholder.

Mr Chatfield became managing director later that year and Mr Lovelady was company secretary from April2003.

The two departed the loss-making DCL just over a year ago after a spectacular board bust-up between Mr Chatfield and fellow director and substantial shareholder Ron Hall.

It was their time at DCL that earned Mr Chatfield and Mr Lovelady their most famous enemies, even though Mr Chatfield denies he was responsible for the high-profile firings, saying he was not responsible for programming at the station when Messrs Blackman, Hinch and Kennett left.

Mr Lovelady's experience with boardroom brawls dates back to 1998 when he lost his seat as a director of Perth developer Axiom Properties, which floated in early 1997 with an issue of 20 million shares at 40¢ each.

Things started promisingly enough, with Axiom shares rising to 52¢ as its sales and profits rose during 1997.

But by 1998, things had turned sour as the company encountered delays in key projects.

Later that year Axiom admitted to defaulting on a loan from the Commonwealth Bank and its shares tanked to less than 10¢.

Shareholders voted not to re-elect Mr Lovelady at an annual meeting in November 1998 after he led a campaign against a proposed takeover.

He later worked at Advent in Singapore with Mr Chatfield before joining Skywest in mid-2003.

CVC was 78 per cent owned by Advent when it launched its bid for Skywest in April.

CVC's takeover documents describes the group as an unlisted public company, incorporated in Singapore with a majority holding of Australian investors.

Its business is summed up as "investing, financing and investment holdings".

"CVC is a relatively new company," the company's bidder statement says. "During its limited period of operation, CVC has always remained profitable."

Through his lawyer Stephen Lemonis, Mr Chatfield said yesterday he regarded the bidder's statement as "adequately setting out the information required of CVC".

CVC's bidder's statement makes only passing references to Advent, in which Mr Chatfield has a substantial holding. But this company is well known to a group of Perth investors who contributed some of the $10 million-plus Advent is said to have raised before the tech wreck.

These investors can take little comfort in the fact that they include Kerry Packer's Publishing & Broadcasting Ltd. PBL still has a holding in Advent but a source said yesterday PBL had written off this investment "several years ago".

"They still own the shares but I don't know who would take them off their hands," he said.

A copy of Advent's latest annual report, obtained by WestBusiness, reveals that by March 2003 Advent had racked up $S16.9 million ($14.09 million) in accumulated losses.

Its balance sheet lists more than $S11 million in share premium reserves and more than $S7 million in issued capital. The report was dated to March 31, 2003, but was not signed off until November 2003.

Advent describes itself as a "broadcast development business" with involvement in radio, advertising, investment, aerospace, e-commerce and digital television.

According to the report, its subsidiaries include Avation, which sells a form of television advertising, and CVC, which has "a variety of financial investments having succeeded in entering an agreement with a significant trade finance company''.

The report later describes CVC as a "dormant" company, fully owned by Advent, in which Advent had invested just $S2 during 2003.

On Advent's performance, Mr Chatfield's managing director's report explains: "The impairment of the company's assets has affected our ability to operate and there remains significant risks and hurdles to overcome for the company to develop."

At the time of the report, Advent had about $S60,000 cash in hand and owned about $S2.68 million in current assets - almost $S450,000 of which were intangible.

One well-placed source said the company raised more than $10 million between 1997 and 2000, which he says was spent in legitimate business development and investment.

"Jeff was very impressive and he raised a lot of capital," the source said, attributing Advent's problems partly to Singapore's "complex and restrictive" regulatory environment.

The West
July 7th

Skywest calls on umpire to scrap CVC bid
MICHAEL WEIR

CaptiveVision Capital's hostile move on Skywest is in the hands of Australia's takeovers umpire after the regional airline yesterday formally applied to have the Singaporean company's bid scrapped.

The Takeovers Panel said it had received an application from Skywest alleging unacceptable circumstances by CVC, which is also Skywest's biggest shareholder.

The panel said Skywest alleged the unacceptable circumstances arose from communications and arrangements between CVC managing director Jeff Chatfield and Skywest's dumped chief financial officer Craig Lovelady, a former director of CVC and long-time business associate of Mr Chatfield.

They included the "passing to Mr Chatfield and CVC's advisers of material, confidential and price sensitive information concerning Skywest and assisting Mr Chatfield with the planning for and carrying out of the bid, in each case, both before and after the announcement by CVC of the bid".

Mr Lovelady has denied any wrongdoing and says any communication with Mr Chatfield was with the express authorisation of Skywest.

Skywest has sought orders to set aside all acceptances of the bid, and for shares obtained by CVC while it had "inside information" to be sold by the Australian Securities & Investments Commission.

The panel said it would appoint a body to consider the application, but had not yet sought the views of CVC or other people involved. Skywest sacked Mr Lovelady last week after claiming it found hundreds of emails sent from his computer to Mr Chatfield containing detailed financial trading data.


The West is in full flight. Seems incredible that Skywest didn't do checks on these guys.

Juliet

[Wirraway]

Thurs "The Australian"

Watchdog steps into Skywest takeover
By Steve Creedy, Aviation writer
July 08, 2004

THE Takeovers Panel yesterday stepped into the messy Skywest takeover row and issued interim orders preventing the deal from closing until next month.

Perth-based Skywest moved this week to scuttle the hostile, $11 million-plus takeover bid by Singapore's Captive Vision Capital (CVC) and sought an interim order preserving the status quo of the bid.

The regional carrier last week sacked chief financial officer Craig Lovelady, precipitating a barrage of claims and counter-claims.

It alleged in its application to the panel that Mr Lovelady passed on confidential financial information to CVC and assisted it with planning and carrying out the bid.

The unsubstantiated claims have been denied by Mr Lovelady.

Skywest has also asked the panel to set aside takeover contracts stemming from bid acceptances and hand over shares bought by CVC to the Australian Securities & Investments Commission.

Yesterday, the panel ordered CVC to extend the bid until 5pm Perth time on August 6.

It also stopped CVC from declaring the bid condition free without the panel's prior written approval and restricted CVC and Skywest from communicating with shareholders about the bid without first submitting drafts for review.

Takeovers Panel director George Durbridge said the orders did not prevent acceptances for the bid coming in but stopped it closing while Skywest's application was being reviewed.

"It's still a conditional bid and, indeed, our understanding is several of the conditions have been triggered," he said.

"So, while acceptances can come in and while those will create contracts which are subject to those conditions, the bid can't close and the conditions can't be waived for four weeks yet."

The panel has its work cut out wading through the morass of legal action and conflicting explanations that have emerged since Mr Lovelady's dismissal last week.

Mr Lovelady is launching wrongful dismissal and defamation proceedings and his lawyer has claimed he was given authority to pass on the information by Skywest chief executive Scott Henderson.

Mr Henderson has strenuously denied the claim.

Mr Durbridge said the panel was expecting to receive more information and explanations relating to the allegations and it was still early days for its investigation.

"I don't know where we're going to wind up," he said.

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