Section28- BE
8th Jul 2009, 02:02
Article Ex The SMH site- Business Day Section
Airline boss feels margin call turbulence
CBD (http://business.smh.com.au/opinion/cbd)
July 8, 2009
http://images.smh.com.au/2009/07/07/621835/200cbd-200x0.jpg Jim Davis . . . had the rug pulled from under 51,500 shares. Illustration: John Shakespeare
Michael Evans (http://www.smh.com.au/cgi-bin/common/CBDTips.pl) still struggles to think and chew at the same time.
THE executive margin call is back. And at the airline Rex it's being done with a touch of regional flair.
Jim Davis, boss of Regional Express, has copped a margin call on 20 per cent of his stake in the company, forcing the sale of shares in breach of Rex's directors' share trading policy.
Davis had the rug pulled from under 51,500 shares valued at nearly $40,829 last week, or a trigger price of about 79c.
"Liquidation by margin lending facility without prior alert to Mr Davis," Rex said bluntly in a change of director's interest notice yesterday. "Sale was not intentional." Oops.
Still, stuff happens, and the airline's share price has fallen more than 20 per cent in the past month or so.
A spokeswoman admitted Davis's pants-down moment breached the company's share trading policy. "All directors trades have to be approved by the chairman, so you can infer from that it was in so-called breach," the spokeswoman said.
Cleared for trading
But let's be clear: a breach is not always a breach. While acknowledging the sale broke Rex's directors' trading policy because Davis didn't get the chairman's permission, the spokeswoman said there was no breach of the policy on the timing.
That's despite the rug being pulled just days before closing of the airline's books for the financial year. Hardly a good look.
"He [Davis] is a director and has to adhere to policy regarding directors," the spokeswoman said, pointing out the company's stated share trading policy applied to employees - but not directors.
Odd, we figured Davis was an employee given he is the company's managing director. The spokeswoman declined further comment on the timing.
Regaining control
But as we're fast learning, they do things a bit differently at high altitude out bush.
And having had the shares sold from under him in breach of the directors' trading policy, Davis now had the permission of the chairman, Kim Hai Lim, to buy the shares back, the spokeswoman said. Effective immediately.
"Jim Davis is in the process of repurchasing the shares," she said, adding that was due to be completed either late yesterday or today.
And rebuying the shares did not constitute a further breach of the company's share trading policy, the company argued, as Davis had the chairman's permission, despite the books now being closed and company preparing its full-year results.
Something we'd expect Mr Davis would be involved with as an employee given he's the managing director. The spokeswoman would not answer questions about whether Davis or other directors had further margin loans over their stakes.
Airline boss feels margin call turbulence
CBD (http://business.smh.com.au/opinion/cbd)
July 8, 2009
http://images.smh.com.au/2009/07/07/621835/200cbd-200x0.jpg Jim Davis . . . had the rug pulled from under 51,500 shares. Illustration: John Shakespeare
Michael Evans (http://www.smh.com.au/cgi-bin/common/CBDTips.pl) still struggles to think and chew at the same time.
THE executive margin call is back. And at the airline Rex it's being done with a touch of regional flair.
Jim Davis, boss of Regional Express, has copped a margin call on 20 per cent of his stake in the company, forcing the sale of shares in breach of Rex's directors' share trading policy.
Davis had the rug pulled from under 51,500 shares valued at nearly $40,829 last week, or a trigger price of about 79c.
"Liquidation by margin lending facility without prior alert to Mr Davis," Rex said bluntly in a change of director's interest notice yesterday. "Sale was not intentional." Oops.
Still, stuff happens, and the airline's share price has fallen more than 20 per cent in the past month or so.
A spokeswoman admitted Davis's pants-down moment breached the company's share trading policy. "All directors trades have to be approved by the chairman, so you can infer from that it was in so-called breach," the spokeswoman said.
Cleared for trading
But let's be clear: a breach is not always a breach. While acknowledging the sale broke Rex's directors' trading policy because Davis didn't get the chairman's permission, the spokeswoman said there was no breach of the policy on the timing.
That's despite the rug being pulled just days before closing of the airline's books for the financial year. Hardly a good look.
"He [Davis] is a director and has to adhere to policy regarding directors," the spokeswoman said, pointing out the company's stated share trading policy applied to employees - but not directors.
Odd, we figured Davis was an employee given he is the company's managing director. The spokeswoman declined further comment on the timing.
Regaining control
But as we're fast learning, they do things a bit differently at high altitude out bush.
And having had the shares sold from under him in breach of the directors' trading policy, Davis now had the permission of the chairman, Kim Hai Lim, to buy the shares back, the spokeswoman said. Effective immediately.
"Jim Davis is in the process of repurchasing the shares," she said, adding that was due to be completed either late yesterday or today.
And rebuying the shares did not constitute a further breach of the company's share trading policy, the company argued, as Davis had the chairman's permission, despite the books now being closed and company preparing its full-year results.
Something we'd expect Mr Davis would be involved with as an employee given he's the managing director. The spokeswoman would not answer questions about whether Davis or other directors had further margin loans over their stakes.