Allco and The APA Bid For Qantas.
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Allco and The APA Bid For Qantas.
The corporate world is indeed a jungle with its own ecosystems. The predators in it use at least as many tactics to catch their prey as nature provides, including camouflage and the strategy of scanning the herd for perceived weaker members who make easy targets.
One of the functions of a Board of Directors, perhaps its most important function, is to provide the company with that Sixth sense that can warn Management when danger is approaching. This is in part why grey hair and membership of the right clubs is an indispensable asset sometimes.
To put that another way, the old bull, or the old mother for that matter, has seen it all before. The highly complex merger and acquisition proposals that sound too good to be true. The fast talking fascinator that ensnares management in consultant driven "business transformation". The almost but maybe not quite perfectly legal deal that relies on a questionable legal "opinion". The foreigner who comes to Management with tales about his golden overseas connections. It is the function of the leaders of the herd to sniff out these predators and take action, directing the herds path away from the predator.
Now little Sunfish learned about this the hard way but lived to tell the tale. I spent $15,000 of good money on a worthless consulting assignment called a database scam, Thirty years later I saved our company $100,000 when someone tried the same scam on one of our hapless managers. I learned that when you invite a merchant banker to find companies you might want to acquire, that the first thing he does behind your back is evaluate you as prey for a larger animal. I learned that some so called "reputable" institutions aren't. I found that dealing with an honest but tough guy like Joe Gutnick was delightful. I watched a company spend Two million dollars on developing a system specification for someone who told them he was related to the President of Indonesia. I watched a State Government barely avoid giving a million dollar grant to a Turkish "businessman" with fake credentials. I learned that there are plenty of Hyenas and snake oil salesmen out there, and that most of them are beautifully dressed, softly spoken folk who will even laugh at my bad jokes. To this day, I will not deal with, invest in or have any connections with any business associated with a certain merchant bank because one of their teams of lying, thieving, dishonest Hyenas once caused me to lose a lot of sleep.
To put that another way, i learned to check if people were kosher, if I couldn't find out, I asked my Board of Directors to find out for me.
The question I have is what were the Board of Qantas thinking at the time of the APA bid? Didn't they do any due diligence at all? My old Board of Directors would probably have fired me for merely talking to the likes of Allco.
Allco's David Coe and Gordon Fell face new questions in court | The Australian
One of the functions of a Board of Directors, perhaps its most important function, is to provide the company with that Sixth sense that can warn Management when danger is approaching. This is in part why grey hair and membership of the right clubs is an indispensable asset sometimes.
To put that another way, the old bull, or the old mother for that matter, has seen it all before. The highly complex merger and acquisition proposals that sound too good to be true. The fast talking fascinator that ensnares management in consultant driven "business transformation". The almost but maybe not quite perfectly legal deal that relies on a questionable legal "opinion". The foreigner who comes to Management with tales about his golden overseas connections. It is the function of the leaders of the herd to sniff out these predators and take action, directing the herds path away from the predator.
Now little Sunfish learned about this the hard way but lived to tell the tale. I spent $15,000 of good money on a worthless consulting assignment called a database scam, Thirty years later I saved our company $100,000 when someone tried the same scam on one of our hapless managers. I learned that when you invite a merchant banker to find companies you might want to acquire, that the first thing he does behind your back is evaluate you as prey for a larger animal. I learned that some so called "reputable" institutions aren't. I found that dealing with an honest but tough guy like Joe Gutnick was delightful. I watched a company spend Two million dollars on developing a system specification for someone who told them he was related to the President of Indonesia. I watched a State Government barely avoid giving a million dollar grant to a Turkish "businessman" with fake credentials. I learned that there are plenty of Hyenas and snake oil salesmen out there, and that most of them are beautifully dressed, softly spoken folk who will even laugh at my bad jokes. To this day, I will not deal with, invest in or have any connections with any business associated with a certain merchant bank because one of their teams of lying, thieving, dishonest Hyenas once caused me to lose a lot of sleep.
To put that another way, i learned to check if people were kosher, if I couldn't find out, I asked my Board of Directors to find out for me.
The question I have is what were the Board of Qantas thinking at the time of the APA bid? Didn't they do any due diligence at all? My old Board of Directors would probably have fired me for merely talking to the likes of Allco.
FORMER Allco directors David Coe and Gordon Fell will return to the witness box next week to face another round of questioning over the events leading up to the $1.1 billion collapse of the financial services company.
The focus of the interrogation in the Federal Court in Sydney is likely to be the controversial 2007 Rubicon deal.
Allco collapsed in late 2008. A consortium of banks owed about $660 million appointed Ferrier Hodgson as receiver and manager.
Last year an initial round of questioning yielded information on the inner workings of Allco in the lead-up to its collapse.
Others that had been expected to be questioned -- David Clarke, Michael Stefanovski and Thomas Lennox -- were yesterday excused from further attendance.
The second round of questioning will start next Thursday, when Dr Fell will be examined. He will be followed by Mr Coe.
..........................
The Australian Securities & Investments Commission obtained documents from Rubicon Asset Management, now in liquidation, which it also gave to Ferrier Hodgson, as a result of Federal Court orders.
The Rubicon transaction was not covered in detail during last year's examinations, although it was revealed Allco deputy chairman Bob Mansfield had queried whether Rubicon was "a pile of ****". The Rubicon deal resulted in three of its shareholders sharing in $63m cash and $132m worth of Allco stock.
Two of those shareholders, Mr Coe and Dr Fell, were also directors of Allco. Dr Fell owned 45 per cent of Rubicon.
.....................
The Rubicon deal angered shareholders and came at a time when the Allco share price was suffering. It was later renegotiated before proceeding.
.........................
This would "make the investors rabid" Mr Stefanovski wrote, and the company would end up "smack bang in the middle of a perfect storm into an uncontrollable meltdown scenario".
About 100 unsecured creditors received just 1c in the dollar.
The focus of the interrogation in the Federal Court in Sydney is likely to be the controversial 2007 Rubicon deal.
Allco collapsed in late 2008. A consortium of banks owed about $660 million appointed Ferrier Hodgson as receiver and manager.
Last year an initial round of questioning yielded information on the inner workings of Allco in the lead-up to its collapse.
Others that had been expected to be questioned -- David Clarke, Michael Stefanovski and Thomas Lennox -- were yesterday excused from further attendance.
The second round of questioning will start next Thursday, when Dr Fell will be examined. He will be followed by Mr Coe.
..........................
The Australian Securities & Investments Commission obtained documents from Rubicon Asset Management, now in liquidation, which it also gave to Ferrier Hodgson, as a result of Federal Court orders.
The Rubicon transaction was not covered in detail during last year's examinations, although it was revealed Allco deputy chairman Bob Mansfield had queried whether Rubicon was "a pile of ****". The Rubicon deal resulted in three of its shareholders sharing in $63m cash and $132m worth of Allco stock.
Two of those shareholders, Mr Coe and Dr Fell, were also directors of Allco. Dr Fell owned 45 per cent of Rubicon.
.....................
The Rubicon deal angered shareholders and came at a time when the Allco share price was suffering. It was later renegotiated before proceeding.
.........................
This would "make the investors rabid" Mr Stefanovski wrote, and the company would end up "smack bang in the middle of a perfect storm into an uncontrollable meltdown scenario".
About 100 unsecured creditors received just 1c in the dollar.
Allco's David Coe and Gordon Fell face new questions in court | The Australian
Last edited by Sunfish; 31st Aug 2011 at 20:25.
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Too many people forget the old adage that if something looks to good to be true then it most likely is. 
I have for a long time thought that management in Australia is most definitely second-class. Most learnt what skills they have under a very protectionist regime and when that was finally removed, because of the extreme distortions it caused, they were incapable of learning what it took to survive in the new market.
In relation to the APA bid for QANTAS I think management had seen the storm on the horizon that was caused by their mismanagement and saw the bid as a way of getting out (I know, some were going to stay under the new owners) and being able to say that it was not their fault.
As an aside I notice the screams for protection are on the rise again. We have learnt nothing.
I have for a long time thought that management in Australia is most definitely second-class. Most learnt what skills they have under a very protectionist regime and when that was finally removed, because of the extreme distortions it caused, they were incapable of learning what it took to survive in the new market.
In relation to the APA bid for QANTAS I think management had seen the storm on the horizon that was caused by their mismanagement and saw the bid as a way of getting out (I know, some were going to stay under the new owners) and being able to say that it was not their fault.
As an aside I notice the screams for protection are on the rise again. We have learnt nothing.
Thread Starter
PLovett:
I've waxed lyrical on this topic to Government as a public servant because after visiting some hundred or so manufacturing firms who were looking for assistance the penny dropped; All the successful companies I saw were focused on being INTERNATIONALLY COMPETITIVE That was the key.
These guys weren't trying to compete with Joe Blow down the road, they set their sights on competing with Toshiba, Mitsubishi, GE, Siemens and the like. Naturally they wiped the floor with their short sighted competitors.
I learned to ask the question "Do you export much?" and if I got a negative answer, I knew I was probably dealing with a Lemon of a company.
I drafted out an "export ready" program but got no sale. Austrade operated in that space and they are mostly idiots. One guy at their Los Angeles Office even set up a meeting for me with a potential customer when I was with HdeH, it turned out that he wanted us to make American defence stuff to get around U.S. Government export controls, "as if!" Austrade are dickheads.
Needless to say, since we are at the arse end of the universe, fast and cheap international travel and air freight are crucial for our manufacturing industries if they are to be competitive - hence my continuing interest in Qantas.
What Australia needs is not protection, but a system of incentives to get everyone thinking about competing internationally. It can be done, and the guys who are doing it shut up and keep making money. The whiners are generally uncompetitive and have no idea how their overseas competition operates, nor any idea what their strengths and weaknesses might be.
Did you know for example that a certain Japanese Automotive supply company actually diverts work to Australia because we can do short production runs much more cheaply than they can in Japan?
There are plenty of market niches, for example, not three kilometres from where I am is a company that manufactures the highest end hardware in the world for luxury mega yachts - and they have no interest whatsoever in the Australian market, they don't advertise, they are well and truly profitable and they keep a very low profile. Nobody in Australia has ever heard of them, but my son accidentally fell over them a year or Two ago and the owner got on well enough with him that his sports boat now has some free custom made titanium, glass bead blasted, jib fittings.
As an aside I notice the screams for protection are on the rise again. We have learnt nothing.
These guys weren't trying to compete with Joe Blow down the road, they set their sights on competing with Toshiba, Mitsubishi, GE, Siemens and the like. Naturally they wiped the floor with their short sighted competitors.
I learned to ask the question "Do you export much?" and if I got a negative answer, I knew I was probably dealing with a Lemon of a company.
I drafted out an "export ready" program but got no sale. Austrade operated in that space and they are mostly idiots. One guy at their Los Angeles Office even set up a meeting for me with a potential customer when I was with HdeH, it turned out that he wanted us to make American defence stuff to get around U.S. Government export controls, "as if!" Austrade are dickheads.
Needless to say, since we are at the arse end of the universe, fast and cheap international travel and air freight are crucial for our manufacturing industries if they are to be competitive - hence my continuing interest in Qantas.
What Australia needs is not protection, but a system of incentives to get everyone thinking about competing internationally. It can be done, and the guys who are doing it shut up and keep making money. The whiners are generally uncompetitive and have no idea how their overseas competition operates, nor any idea what their strengths and weaknesses might be.
Did you know for example that a certain Japanese Automotive supply company actually diverts work to Australia because we can do short production runs much more cheaply than they can in Japan?
There are plenty of market niches, for example, not three kilometres from where I am is a company that manufactures the highest end hardware in the world for luxury mega yachts - and they have no interest whatsoever in the Australian market, they don't advertise, they are well and truly profitable and they keep a very low profile. Nobody in Australia has ever heard of them, but my son accidentally fell over them a year or Two ago and the owner got on well enough with him that his sports boat now has some free custom made titanium, glass bead blasted, jib fittings.
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Two things . . .
1. It was a management buy-out and not a PE bid
2. Global Aviation Asset Management Advisory Board - those names again:
Mark Wooley
Geoff Dixon
Peter Gregg
Mark Carnegie
David Coe
Over view by John Durie: - Qantas chief Alan Joyce walks a fine line | The Australian
100 new A320s in the Qantas launch into Asia:
GAAM – AIRCRAFT
GAAM – CUSTOMERS
Toodle pip - must fly!
2. Global Aviation Asset Management Advisory Board - those names again:
Mark Wooley
Geoff Dixon
Peter Gregg
Mark Carnegie
David Coe
Over view by John Durie: - Qantas chief Alan Joyce walks a fine line | The Australian
100 new A320s in the Qantas launch into Asia:
GAAM – AIRCRAFT
GAAM – CUSTOMERS
Toodle pip - must fly!
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1. It was a management buy-out and not a PE bid
Sunfish, thank you for the insight. I think it is history now but back in the days of LPs' and turntables a small company in Tasmania, located on Bruny Island (an island, on an island, on an island continent) made a mozza by manufacturing diamond head stylus pickups for very high end turntables. They never advertised locally but exported 100% of their product.
It can be done but the Australian ethos is to denigrate ourselves, we talk down our successes because of fear of being seen as the tall poppy. Our management style certainly owes a lot to this dysfunctional ethos.
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Dicko and co
MBO:
In most cases, the management will buy out all the outstanding shareholders and then take the company private because it feels it has the expertise to grow the business better if it controls the ownership. Quite often, management will team up with a venture capitalist to acquire the business because it's a complicated process that requires significant capital.
Read more: Management Buyout (MBO) Definition
4.5% of the privatised Qantas was going to the "managers" . . . at the $11b acquisition price and plan to strip, breakup and refloat . . . you do the math.
There was/is also a lingering and significant question about who took the deal to whom . . . here's one reference:
Was Dickson in on plot from start? - CBD - Comment & Analysis - Business
In most cases, the management will buy out all the outstanding shareholders and then take the company private because it feels it has the expertise to grow the business better if it controls the ownership. Quite often, management will team up with a venture capitalist to acquire the business because it's a complicated process that requires significant capital.
Read more: Management Buyout (MBO) Definition
4.5% of the privatised Qantas was going to the "managers" . . . at the $11b acquisition price and plan to strip, breakup and refloat . . . you do the math.
There was/is also a lingering and significant question about who took the deal to whom . . . here's one reference:
Was Dickson in on plot from start? - CBD - Comment & Analysis - Business
The Mayne Report - Drama at the Qantas AGM
Don't you just love how these guys work ? Regardless what happens, their names tend to pop up everywhere when a buck is to be made. Amazing that these 2(among others) just made an absolute motza selling GAAM.
Best of mates, fishing trips, business dealings, no conflict whatsoever.
If the airline business is such a bad business to be in why are these guys making so much money on the side businesses associated with the airline
But its very admirable that he has various charitable endeavors. Very.
THE CARNEGIE WYLIE CONNECTION
There was reportedly $1.2 billion in fees riding on the APA takeover bid and Jackson confirmed that $98 million of them were success fees for the Qantas advisers, UBS and Carnegie Wylie.
These are the guys who urged the board to keep recommending the bid to the death and clearly had the same massive conflicts as the management team because they would have all been hugely enriched if the deal had gone through.
I pointed this out and then asked about a recent press report that Qantas finance director Peter Gregg had been to Europe on a fishing trip with Mark Carnegie – the very adviser who stood to personally receive more than $10 million in fees if the deal went through.
Gregg got all defensive rejecting the insinuation in the question and then proudly declaring that he also supports Mark Carnegie's various charitable endeavours.
That's swell – but the conflict remains because. Besides, I'm not aware of Carnegie directly advising on other multi-billion dollar takeover deals because that's usually done by his partner John Wylie, who has just pocketed a huge fee after shepherding the Coles takeover through.
The AFR picked up this debate with the following in the November 15 edition on page 24 in a Mark Skulley story:
"The closest to an ace serve came when shareholder activist Stephen Mayne queried whether a $96 million success fee was payable to the airline's advisers, including Carnegie Wylie, if the private equity bid had succeeded. Chief financial officer Peter Gregg confirmed he had enjoyed a spot of fishing with Mark Carnegie after after the takeover bid failed and that he also did charity work with him. 'I make no apologies for fishing, but I do reject any insinuation that I did something that was illegal or undercover in this process. I don't think you have any right to make that insinuation'."
There was reportedly $1.2 billion in fees riding on the APA takeover bid and Jackson confirmed that $98 million of them were success fees for the Qantas advisers, UBS and Carnegie Wylie.
These are the guys who urged the board to keep recommending the bid to the death and clearly had the same massive conflicts as the management team because they would have all been hugely enriched if the deal had gone through.
I pointed this out and then asked about a recent press report that Qantas finance director Peter Gregg had been to Europe on a fishing trip with Mark Carnegie – the very adviser who stood to personally receive more than $10 million in fees if the deal went through.
Gregg got all defensive rejecting the insinuation in the question and then proudly declaring that he also supports Mark Carnegie's various charitable endeavours.
That's swell – but the conflict remains because. Besides, I'm not aware of Carnegie directly advising on other multi-billion dollar takeover deals because that's usually done by his partner John Wylie, who has just pocketed a huge fee after shepherding the Coles takeover through.
The AFR picked up this debate with the following in the November 15 edition on page 24 in a Mark Skulley story:
"The closest to an ace serve came when shareholder activist Stephen Mayne queried whether a $96 million success fee was payable to the airline's advisers, including Carnegie Wylie, if the private equity bid had succeeded. Chief financial officer Peter Gregg confirmed he had enjoyed a spot of fishing with Mark Carnegie after after the takeover bid failed and that he also did charity work with him. 'I make no apologies for fishing, but I do reject any insinuation that I did something that was illegal or undercover in this process. I don't think you have any right to make that insinuation'."
Best of mates, fishing trips, business dealings, no conflict whatsoever.
If the airline business is such a bad business to be in why are these guys making so much money on the side businesses associated with the airline
But its very admirable that he has various charitable endeavors. Very.
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Buyout Schmuyout
Whatever way you look at it the rat would have been screwed by the ensuing GFC.
The whole deal was both repugnant and immoral.An employee buyout would be a positive outcome
The whole deal was both repugnant and immoral.An employee buyout would be a positive outcome
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.....little birdie told me Leighton CFO Peter Gregg has been given an ultimatum from his Board. Concentrate on this job mate, and not on the Qantas buyout, or your job here is gone.......
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Remind's me of the carefree "salad days"...
SMH
General manager warns Qantas shareholders
Rhys Haynes From: Herald Sun August 31, 2007 12:00AM
QANTAS chief executive Geoff Dixon was forced to "abandon" his day job while working on the unsuccessful $11 billion takeover of the airline earlier this year.
In a warning to all shareholders and management of public companies that are the subject of private equity buyouts, Qantas executive general manager John Borghetti yesterday revealed the size of the task facing senior Qantas executives.
Airline Partners Australia launched its $5.45 a share bid in December last year and looked to have sealed the Qantas takeover in May, before a key US investor scotched the bid by failing to accept by the deadline.
Mr Borghetti said Mr Dixon and chief financial officer Peter Gregg were among high-level staff who worked on the deal.
"Senior management . . . (including) Geoff, Peter, me . . . a lot of time was taken up with this thing," he told an American Chamber of Commerce lunch.
"It went about six months. You couldn't get your job done. You had to sort of abandon it.
"You couldn't focus on it."
Mr Borghetti said other senior executives had "carried the company through" the period.
Qantas chairwoman Margaret Jackson was forced to resign from the company's board after the bid failed, having publicly ridiculed shareholders who were not supporting APA's offer.
Ms Jackson will be replaced by former Rio Tinto chief executive Leigh Clifford when she steps down in November.
Earlier this month Qantas announced a 50 per cent rise in annual net profit to $720 million.
Rhys Haynes From: Herald Sun August 31, 2007 12:00AM
QANTAS chief executive Geoff Dixon was forced to "abandon" his day job while working on the unsuccessful $11 billion takeover of the airline earlier this year.
In a warning to all shareholders and management of public companies that are the subject of private equity buyouts, Qantas executive general manager John Borghetti yesterday revealed the size of the task facing senior Qantas executives.
Airline Partners Australia launched its $5.45 a share bid in December last year and looked to have sealed the Qantas takeover in May, before a key US investor scotched the bid by failing to accept by the deadline.
Mr Borghetti said Mr Dixon and chief financial officer Peter Gregg were among high-level staff who worked on the deal.
"Senior management . . . (including) Geoff, Peter, me . . . a lot of time was taken up with this thing," he told an American Chamber of Commerce lunch.
"It went about six months. You couldn't get your job done. You had to sort of abandon it.
"You couldn't focus on it."
Mr Borghetti said other senior executives had "carried the company through" the period.
Qantas chairwoman Margaret Jackson was forced to resign from the company's board after the bid failed, having publicly ridiculed shareholders who were not supporting APA's offer.
Ms Jackson will be replaced by former Rio Tinto chief executive Leigh Clifford when she steps down in November.
Earlier this month Qantas announced a 50 per cent rise in annual net profit to $720 million.
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This explains a lot.....
One in 25 bosses is a secret psychopath | News.com.au
One in 25 bosses is a secret psychopath | News.com.au
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The link should be more like '23 out of 25 QF Bosses' are disgusting greedy pigs. (the other 2 resigned, one has high morale standards and the other went to Virgin).
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Gobbledock, Qantaslink Sydney has 3 corporate psychopaths that I know of, starting at the top.
Narcissism is but one common/key trait characteristic to all three.
Therefore, I suspect it is somewhat more common in airlines.
Narcissism is but one common/key trait characteristic to all three.
Therefore, I suspect it is somewhat more common in airlines.
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PLovett said,
I think it is history now but back in the days of LPs' and turntables a small company in Tasmania, located on Bruny Island (an island, on an island, on an island continent) made a mozza by manufacturing diamond head stylus pickups for very high end turntables
For those of us known as "audiophiles", of which I am one, the LP and turntable is still thankfully very much in production, although in a limited form. The comparisons in audio performance compared to that of CD is mind blowing.
Sorry for the thread drift.
I think it is history now but back in the days of LPs' and turntables a small company in Tasmania, located on Bruny Island (an island, on an island, on an island continent) made a mozza by manufacturing diamond head stylus pickups for very high end turntables
For those of us known as "audiophiles", of which I am one, the LP and turntable is still thankfully very much in production, although in a limited form. The comparisons in audio performance compared to that of CD is mind blowing.
Sorry for the thread drift.
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Always wondered how Gregg had time to play all these balls while Leighton was completely shafted by the market due to profit downgrades.
About time someone said enough is enough while the press are reporting his "other ventures" with old friends. I thought CFO was a full time position but evidently not.
Then again there is some history of the Rat CFO dabbling in privatisation bids so maybe I am the one who has the problem.
God save us from this era of executive behaviour, they just don't seem to get it.
About time someone said enough is enough while the press are reporting his "other ventures" with old friends. I thought CFO was a full time position but evidently not.
Then again there is some history of the Rat CFO dabbling in privatisation bids so maybe I am the one who has the problem.
God save us from this era of executive behaviour, they just don't seem to get it.
