Project Suzie

[QFinsider]

That was her name before the APA bid. You see sportsfans right after it was privatised, Big Kerry and some smarty pants at Mac bank were going to take it private.

Let us see who was involved

Dixon
Strong
Pemberton (none of the executive allegedly knew)

Packer
Moore (Mac Bank)
Bonderman (Texas Pacific) (who was linked to KKR) as Clifford is now

and on it goes...
The real chestnut were the leasing companies. that was a bit part of the APA/Allco deal. Methinks today if one were to sniff around the leasing entities all sorts of tangled webs and similarly named individuals would surface, including Dixon, Buchanan, Eddington (Also a Rio Tinto mate of Clifford's)

If you knew Suzie - Business - Business - smh.com.au (http://www.smh.com.au/news/business/if-you-knew-suzie/2007/05/25/1179601670149.html?page=2)

Alan Kohler now does a fantastic job on the inflight entertainment on the business program. :=

[gobbledock]

Very nice work QF Insider . The parcel is starting to become unwrapped.
I have mentioned in previous posts that the more you dig the more you will find. Nice to see some old 'news articles' from the history pages brought out for a further round of scrutiny.
If anybody believes that the only source of revenue that an Executive recieves is through salary, bonuses and share options then it is time to bury your head back in the sand.
Keep digging.

[Sunfish]

About Thirty years ago, I had dinner at Tims place with his father and mother. Gordon, his accountant Dad, was in charge of investing the Myer family fortune, something he hade done with great success. After dinner he vouchsafed his secret to investing.

Gordon simply looked for badly managed companies. When he found a potential target, he made his own valuation of the business, sometimes even going to local real estate agents to value their assets....

When he found something that was badly managed and trading at or less than asset value, he quietly bought a stake in the company.

Then he simply waited until the rest of the market discovered the same opportunity, bought in kicked out management and cleaned up the mess.

Buy Qantas shares Tuesday morning, I have the feeling we will shortly be taken for a delightful ride. The Board and Management goings on at Qantas today have exactly the same smell as the APA bid.


If you knew Suzie

Kate Askew and Scott Rochfort report.


May 26, 2007

The bungled Qantas bid was just one chapter in a 10-year saga involving Macquarie Bank and the Packer family to win control of the national carrier.

THE code name was Project Suzie. It was October 1998, and Qantas Airways was about to fall prey to a hostile private equity bid. Back then, they were called leveraged buyouts. Three months earlier, an ambitious 26-year-old investment banker nicknamed "Brains" around Macquarie Bank's Sydney office had put together a team to work up the deal to take Qantas out of the public's hands. A decision by a debt-averse Kerry Packer spared it at the last minute.

But for this, the national carrier would likely have found its way into the hands of the country's richest man, one of the world's leading private equity operators, Texas Pacific Group, and Macquarie, the aggressive home-grown investment bank.

The banker, Ben Brazil, had been hired straight from university and had been quickly adopted by one of the bank's heavy hitters, Nicholas Moore, as a protégé.

It was Brazil who had convinced Ashok Jacob, the head of the Packer family's key private company, Consolidated Press Holdings, to take it to Packer.

Packer senior liked it immediately.

In the several meetings to discuss the deal, the irascible Packer patriarch labelled airline pilots "glorified bus drivers" and relished the prospect of shaking up what he viewed as an industry that did not deserve the mystique afforded it.

Meanwhile, Brazil had also convinced David Bonderman's Texas Pacific Group to join the bidding consortium.

Five years earlier Texas Pacific had bought the bankrupt Continental Airlines.

It was the deal that would catapult Bonderman into the realms of the fabulously wealthy and drive his interest in airlines.

By the time he was finished with Continental, he would be $US600 million richer.

And by that stage, his Texas Pacific had bought 20 per cent of the little-known Irish carrier Ryanair, which went on to become Europe's largest low-cost airline.

So when the opportunity to grab a slice of Qantas presented itself, Bonderman jumped at the idea.

Project Suzie's third partner was Macquarie itself, which planned to take a minor stake in the bidding vehicle. It also stood to make fees as the deal's adviser.

The deal was kept so quiet within Macquarie that Qantas didn't even appear on the list of banned stocks that employees in the mergers and acquisitions team were forbidden to trade.

Even at that stage, Macquarie could see the wealth of opportunities. All it had to do was re-engineer the airline's balance sheet.



Qantas aircraft were undervalued. If the jet debt was transferred off the Qantas balance sheet and financed through an obscure process out of New York, there would be more money available to the shareholders - all three of them.

Everything was ready to go. Project Suzie was about to be launched. But two events took place that would kill it.

First, Kerry Packer began to get cold feet. Unlike the recent Airline Partners Australia consortium, the big fella could foresee problems in the country's richest man buying Qantas. It was never going to be easy to convince the public.

Then the Qantas share price began to climb. In July, the shares were trading at $2.40. But by October they had risen to $2.67, valuing the airline at $3.1 billion. By the end of the year, the stock had hit $3.40.

There were suspicions the plan had leaked out and that someone was trading on the information.

A vast number of options over Qantas shares changed hands in a single transaction.

The Macquarie hierarchy was apoplectic. The bank was already in the firing line after one of its gun executives had been charged with insider trading, accused of using his knowledge about the TNT takeover, on which Macquarie was advising, to trade options.

The identity of the Qantas buyer was never discovered.

Then, at the last minute, the physically ailing Packer had decided the airline industry was just too big a punt; a big call from someone who spent every spare minute in Las Vegas and London casinos.

The Asian economies had been in meltdown for a year and regional tourism was hardly at its sparkling best.

James Packer, too, wasn't overly convinced of the financial merits of a private equity bid for Qantas.

The deal may have fallen over but Brazil turned it into a personal win.

Through Project Suzie he had become close to the Packer organisation.

He later accepted an offer to jump to Consolidated Press Holdings, before heading back to Macquarie Bank where he now is employed in its London office.

According to directors at the time, not a whisper of Project Suzie reached the Qantas board.

Macquarie, in particular, was careful that it never did. It was then running an extremely profitable aircraft leasing business, which would have been damaged by news of any hostile bid drifting out to the Qantas board.

"I have no such recollection of any bid coming forward," said veteran director Jim Kennedy, who served on the Qantas board between 1995 and 2006.

"I'm sure Gary [Toomey, Qantas's finance director] would have told us at the time," he said.

It is understood Kerry Packer told senior Qantas executives only just before his death in 2005 that "people on his behalf" had looked at the airline.

It would take another eight years before a Packer was again involved in a deal to take Qantas out of public hands. This time he would occupy a different seat at the table.

WHEN James Packer's name was raised at the press conference to announce the Macquarie-led $11.1 billion friendly takeover for Qantas five months ago, no one realised the extent of his connections.

Chairman Margaret Jackson fielded a question about Packer's potential conflict of interest, given his large personal holding in Macquarie Bank and his seat on the Qantas board, and could barely disguise her disgust.

No one questions a Packer, let alone the integrity of a Packer.

Had Packer absented himself from the takeover discussions because he was the single biggest individual shareholder in Macquarie, the bank organising the $11.1 billion bid?

"I think that's absolutely an absurd suggestion … of course I did not ask James to remove himself from the decision-making process," Jackson fumed.

"I don't believe that James had any conflict of interest, and I find it offensive that you might even suggest that."

James Packer knew a lot more about the risks and possibilities of a private equity grab for Qantas and was in a better position to advise Qantas shareholders than most of the people watching the friendly bid unfold that day realised.

Indeed, Ben Brazil's nearly successful attempt to pull Kerry and James Packer across the line on a Qantas bid was not the first time Macquarie had lusted after the airline. And once again, Texas Pacific and David Bonderman were coming along for the ride. For Macquarie, it was turning into an obsession.

Several years earlier, the Herald has learned, Macquarie worked on an even earlier version of Project Suzie. Back then, in late 1996, a tilt at Qantas had been conceived by Nicholas Moore.

Moore believed Qantas "could be geared up to a greater level", says an insider. This deal never went beyond concept stage and certainly never reached the Qantas board, according to board sources. Moore declined to comment when contacted by the Herald.

While the Packer family's connections to Qantas were closer than the public realised, there were also strong links between the airline and Macquarie Bank.


In August 1995 Macquarie had come up with a debenture, called a Qanmac, which allowed foreigners to gain exposure to Qantas through an equity instrument, thereby overcoming the constraints of the Qantas Sale Act which blocks foreign investors from owning more than 50 per cent of the airline.

James Strong was then running Qantas.

Under Strong were two ambitious executives - finance director Gary Toomey and retail and marketing head Geoff Dixon. Both desperately wanted Strong's job when he retired.

"You were either in Toomey's camp or in Dixon's," says a Qantas insider.

"It was one or the other."

Sworn Toomey supporters included Peter Gregg, the aggressive accountant who was later to replace him when he went to run Ansett, Peter Lucas and a young Grant Fenn. All had plenty of contact with Macquarie and Lucas now works there.

So when Macquarie Bank approached Dixon and Gregg late last year, it had supporters on the inside.

Gregg was onside right from the beginning. And with the help of a $100 million-plus incentive, Macquarie convinced Dixon the deal was a goer.

It also believed it had support on the Qantas board. According to one board insider, James Packer thought the $5.45-a-share offer was "compelling" when the price was hammered out in December last year.

Packer and Dixon were also very close. Not only had Packer joined the board of Qantas board in 2004, in May last year, Dixon had reciprocated. He agreed to join the board of Publishing and Broadcasting when James Packer restructured the board and the company after the death of his father.

According to Qantas board sources, Packer was asked to join Qantas because of his sway in Canberra. And Margaret Jackson and Dixon relished the prospect of being able to take advantage of Packer's broader perspective, they say.

Insiders say he soon began giving his view in management strategy briefings to the board. He was sometimes at odds with Dixon on strategic matters.

However, since the private equity grab for Qantas failed, Packer made it plain to those around him that he wanted to quit Qantas.

Even six months earlier - around the time Airline Partners bid for Qantas became public - those close to Packer claim his busy work schedule with casino developments from Asia to Russia meant he was increasingly stretched to find time for Qantas.

The word began to leak out that Packer wanted off the board. Last week, Jackson's departure provided the catalyst.

Also, Packer believed that Margaret Jackson should not bear the brunt of the deal's failure on her own. "Personally, he felt it was a way to shelter Margaret," says one insider.

As Jackson defended Packer's integrity in brutal fashion at that December press conference, she was also a guardian for the Packer business interests in a broader sense.

The now 54-year-old Jackson was invited onto an advisory board of CPH soon after Kerry Packer died in December 2005.

She and her husband, former lawyer cum ski resort owner, Roger Donazzan, are also on the guest list for his wedding in France next month to Erica Baxter.

If James Packer's links to Qantas stretched further than anyone realised, his association with Macquarie was certainly out in the open.

Until February this year, he was Macquarie's largest individual shareholder. Indeed, the 15th biggest shareholder with 1 million shares, outdone only by the big investment institutions.

A search of the Macquarie Bank register this week, however, revealed that Packer sold his entire Macquarie stake in two tranches in January and February this year.

It was less than two months after the bid had been launched.

No one at Qantas management is ruling out another tilt from Macquarie Bank.

But given the sensitivities of a private equity buyout for the national icon, neither does anyone expect it to come until after this year's federal election.

Dixon acknowledged before investors on Thursday that Federal parliamentarians were in no mood to entertain any lobbying from the airline.

They are still incensed about revelations that APA planned to strip $4.5 billion out of the airline - an admission made only after getting approval by Federal Treasurer Peter Costello to proceed with the $11.1 billion bid.

Some MPs feel they were misled by the consortium.

"I don't think I'm silly enough to put my head up in Canberra between now and an election with either side of politics to talk about wanting to change the Qantas Sale Act given the activities of the past seven months," Dixon says.

Some politicians now refer to APA as the "Gordon Gecko consortium".

"I don't think there would be a good reaction in Canberra at the moment to such as move," Federal Liberal MP Bruce Baird says. "People are glad it's off the agenda."

Neither is Macquarie Bank expected to receive as friendly a reception next time around.

Despite being offered the chance to eventually own 5.5 per cent of the carrier under private equity ownership, Qantas senior management has indicated it would reject any future approaches.

Dixon is also making sure he leaves the cupboard bare for Macquarie the next time it runs the rule over the airline.

The Macquarie plan involved an elaborate asset strip of the airline. Not that it ever willingly admitted to it. Businesses would be sold off. And the balance sheet raided.

Now Qantas is planning to divide the spoils among its existing shareholders - something it said it couldn't do previously as a public company.

There will be a buyback worth an estimated $2 billion.

The frequent-flyer plan might be sold off. Freight services also might be on the block. And there will be an aggressive expansion of its international services.

Aside from outlining plans to re-enter South America and the US, it is also considering ramping up flights to Europe. Low-budget arm Jetstar is also considering launching services to Korea, Taiwan, and could be flying to Beirut, Athens, Manchester or even Milan as early as 2009.

That certainly will make a Macquarie return nigh on impossible. Even if it does, it would most likely be without Packer.





If you knew Suzie - Business - Business - smh.com.au (http://www.smh.com.au/news/business/if-you-knew-suzie/2007/05/25/1179601670149.html)

[speeeedy]

Project Dragon is the new project Suzie.

This project has been an evolving strategy, whilst it started as a simple project to attempt to capitalise the growth in Asia with a view to integrating and expanding the links between J*, J* Asia and Qantas.

LG took the bit between the teeth and has convinced AJ and presumably the board that it should be taken much, much further and that is what the "review of international" is. It is just an expansion of the terms of reference of the original project Dragon.

God knows what it has become now, but I suspect that it is a way of privatising Qantas by stealth. That is, setup a foreign airline with the Qantas brand attached (in some way to avoid the Qantas Sale Act problems) but Qantas Airways Ltd (i.e the public company) would have less than a majority as required by most foreign governments and the rest would be a private asian company and the investors in that company will be impossible to trace. But we all know who they will be.

Presto, you now have a private equity investment which owns more than 50% of what will eventually be the largest part of the QF international network.

Whilst I think that is the plan, I don't think it will work. A foreign QF has no "unique" selling point, it loses any advantage in the Australian market due to being seen as 'foreign' and will also be seen in Asia as being 'foreign' also. A lose - lose situation.

[Sparklehorse12]

Geez....very interesting indeed.

Something is a foot.....

[Sunfish]

Asia is littered with the bones of western companies that tried to get a chunk of the Asian market.

To put it simply, Asian markets are for Asian businesses to dominate. Qantas may get a share of the Asian market between Australia and Asia but that is all they will get.


... and if you do make a profit, just wait till you try and repatriate it!

[Sparklehorse12]

It seemed to get lost today that Corrine Namblard was appointed "Effective Immediately" as a Non executive director to the QF board

Corrine was the 10 year CEO of a European Transport Equity Fund and former executive at BNP Paribas.

......hello private equity takeover......

BNP Paribas essentially own the QF A380 fleet through a leasing facility....

KKR,Bain Capital Group private equity buyout funded by BNP Paribas........



By a staff reporter
Qantas Airways Ltd has appointed Corinne Namblard as a non-executive director of the company's board, effective immediately, the company said in a statement.
Chairman Leigh Clifford said the appointment would bolster the board's diversity.

“My fellow Directors and I are pleased that Ms Namblard is joining the Qantas Board and I believe her appointment will further strengthen the board’s diversity of experience and corporate skill,” Mr Clifford said.

Ms Namblard spent the last 10 years as the CEO of Luxembourg-based Galaxy Fund, a European transport equity fund.

[Ero-plano]

Geez, is the Qantas board really this crooked? If so, how the hell do they get away with it?

[standard unit]

Geez, is the Qantas board really this crooked?

Ask yourself, "does it look like a duck?"

[breakfastburrito]

Watch the QAN share volume. As soon as it starts to spike up, its game on.