Tesna escapes near miss with ACTU
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Tesna escapes near miss with ACTU
Sat "Australian Financial Review"
Tesna escapes a near miss with ACTU
Jan 19
Adam Shand
For Tesna and the ACTU, it was an awkward moment in a beautiful friendship - as though the shifty ex-husband had turned up uninvited to the wedding.
The sensitive negotiations during the week over securing $244 million in employee entitlements for Ansett Mark II's workforce was like planning for divorce pre-marriage - eminently sensible, but unromantic nonetheless.
We might never know how close it came to ruining the wedding, but by week's end, there were signs that the happy couple were nearing some form of pre-nuptial agreement.
The week before, ACTU advocate Richard Watts was adamant "a kiss and a promise won't do on this", but now he's talking of "gilt-edged security" by next week.
Ansett's 4,000 prospective employees were still holding unsigned employment contracts, but the ACTU was confident that their entitlements would be secured sometime next week.
There is little doubt that the issue could have sunk Tesna's bid, for as Watts put it: "Everything in this deal is contingent on everything else."
The real danger for Tesna's Solomon Lew and Lindsay Fox was that securing the massive liability could have soured the deal for their star US investors David Bonderman and Bill Franke of Air Partners before they were even securely on the bill.
Despite dispatching teams to work on Ansett's commercial planning, there is apparently nothing tying these crucial investors into Tesna. They have made a commitment to take between 35 and 49 per cent of Tesna and nothing more.
US investors are unused to the collective bargaining strength of Australian unions.
But the ACTU refused to budge, especially as Tesna had been coy in revealing its baseline assumptions and values in talks.
Tesna had apparently looked at buying an insurance bond to cover the bill but had rejected this as too expensive.
With time running out before the January 29 creditors' meeting and the ACTU pressing hard, there was even talk of selling off part or all of Ansett's jewel in the crown, the Sydney passenger terminal.
Although Ansett and Tesna both denied it, there was evidence that a third party had been talking to infrastructure investors before Christmas about the value of the assets, if not hawking them around for sale. Investors were sceptical when values north of $300 million were placed on the terminal.
Part of the problem is that the newly refurbished Ansett terminal is simply too big for the slimmed- down Ansett that Tesna plans. It was assumed that Qantas may have taken some of the surplus space, but it now appears that Qantas will use its own real estate for its planned expansion.
With the support of all 4,000 workers, the ACTU could have grounded Ansett indefinitely. For a moment, Lang Corp's Chris Corrigan must have thought he could snatch the bride from the altar. Lang teamed up with Ansett's rival, Virgin Blue, to pitch a counter bid, offering to employ 2,000 workers and to buy Ansett's freight, maintenance and terminal facilities. But after the bitter 1998 waterfront dispute, it's hard to imagine Corrigan winning over the unions, even were the Tesna bid to fall over.
At the very least, the ACTU's intransigence could have stymied the February 1 handover to Tesna from the administrators, who are reportedly spending about $4 million a week to keep the skeleton of Ansett flying.
Already, the administrators and lawyers and consultants are in for $55 million out of the $91 million available for creditors after the employees are fully paid out.
What seemed like a hurdle for Tesna had become a high jump.
Despite his union ties, Lindsay Fox is more of a bullocker than a hurdler, so perhaps it was best that he left consultants KPMG to lead talks with the ACTU.
By week's end, the parties were working on a "mix 'n' match" solution, which may involve the unions - on behalf of the workers - taking a first-ranking charge over certain Ansett assets, while any shortfall in a future insolvency would be covered by an insurance bond bought by Tesna.
In the process, it seems that the ACTU managed to winkle out more asset valuation details from Tesna.
Tesna escapes a near miss with ACTU
Jan 19
Adam Shand
For Tesna and the ACTU, it was an awkward moment in a beautiful friendship - as though the shifty ex-husband had turned up uninvited to the wedding.
The sensitive negotiations during the week over securing $244 million in employee entitlements for Ansett Mark II's workforce was like planning for divorce pre-marriage - eminently sensible, but unromantic nonetheless.
We might never know how close it came to ruining the wedding, but by week's end, there were signs that the happy couple were nearing some form of pre-nuptial agreement.
The week before, ACTU advocate Richard Watts was adamant "a kiss and a promise won't do on this", but now he's talking of "gilt-edged security" by next week.
Ansett's 4,000 prospective employees were still holding unsigned employment contracts, but the ACTU was confident that their entitlements would be secured sometime next week.
There is little doubt that the issue could have sunk Tesna's bid, for as Watts put it: "Everything in this deal is contingent on everything else."
The real danger for Tesna's Solomon Lew and Lindsay Fox was that securing the massive liability could have soured the deal for their star US investors David Bonderman and Bill Franke of Air Partners before they were even securely on the bill.
Despite dispatching teams to work on Ansett's commercial planning, there is apparently nothing tying these crucial investors into Tesna. They have made a commitment to take between 35 and 49 per cent of Tesna and nothing more.
US investors are unused to the collective bargaining strength of Australian unions.
But the ACTU refused to budge, especially as Tesna had been coy in revealing its baseline assumptions and values in talks.
Tesna had apparently looked at buying an insurance bond to cover the bill but had rejected this as too expensive.
With time running out before the January 29 creditors' meeting and the ACTU pressing hard, there was even talk of selling off part or all of Ansett's jewel in the crown, the Sydney passenger terminal.
Although Ansett and Tesna both denied it, there was evidence that a third party had been talking to infrastructure investors before Christmas about the value of the assets, if not hawking them around for sale. Investors were sceptical when values north of $300 million were placed on the terminal.
Part of the problem is that the newly refurbished Ansett terminal is simply too big for the slimmed- down Ansett that Tesna plans. It was assumed that Qantas may have taken some of the surplus space, but it now appears that Qantas will use its own real estate for its planned expansion.
With the support of all 4,000 workers, the ACTU could have grounded Ansett indefinitely. For a moment, Lang Corp's Chris Corrigan must have thought he could snatch the bride from the altar. Lang teamed up with Ansett's rival, Virgin Blue, to pitch a counter bid, offering to employ 2,000 workers and to buy Ansett's freight, maintenance and terminal facilities. But after the bitter 1998 waterfront dispute, it's hard to imagine Corrigan winning over the unions, even were the Tesna bid to fall over.
At the very least, the ACTU's intransigence could have stymied the February 1 handover to Tesna from the administrators, who are reportedly spending about $4 million a week to keep the skeleton of Ansett flying.
Already, the administrators and lawyers and consultants are in for $55 million out of the $91 million available for creditors after the employees are fully paid out.
What seemed like a hurdle for Tesna had become a high jump.
Despite his union ties, Lindsay Fox is more of a bullocker than a hurdler, so perhaps it was best that he left consultants KPMG to lead talks with the ACTU.
By week's end, the parties were working on a "mix 'n' match" solution, which may involve the unions - on behalf of the workers - taking a first-ranking charge over certain Ansett assets, while any shortfall in a future insolvency would be covered by an insurance bond bought by Tesna.
In the process, it seems that the ACTU managed to winkle out more asset valuation details from Tesna.
