Ansett: let the blamegame begin
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Ansett: let the blamegame begin
Thurs "Sydney Morning Herald"
Ansett deal dead amid threats of legal action
By Darren Goodsir and Brad Norington
Ansett's administrators are considering legal action against the Tesna syndicate after it aborted its $3.6 billion takeover of the airline, forcing them to ground all flights after midnight on Monday.
The dramatic collapse of the deal, leaving 3000 workers without jobs, spells the death of the Ansett brand, 70 years after it first began flying.
Despite the administrators offering a deadline extension to Tesna's principals, Solomon Lew and Lindsay Fox - who had also just secured control of Ansett's Sydney terminal - the pair killed off the deal about 9.30pm on Tuesday, citing legal advice.
Hours earlier, during a night of mixed signals, Tesna had contacted the air safety regulator to demand the fast-tracking of its operator's certificate, saying it was ready to take over.
Sources close to the five-month sale process said that Mr Fox and Mr Lew had split at the last minute over financing. Although Mr Fox wanted to push ahead with the sale, due to be finalised tonight, his partner had reservations at using his own funds.
. .A Tesna spokesman last night rejected the charge, saying: "Every decision has been taken together and there was no difference between them."
The administrators, Mark Mentha and Mark Korda, said they were perplexed and "extremely disappointed" at why the sale had collapsed, adding that they were "ready, willing and able" to close the deal.
Because of healthy bookings over the weekend, they have vowed to keep running flights until at least Monday night. This will guarantee trips for about 70 per cent of booked passengers.
After that, travellers would be flown by Qantas and Virgin Blue, at no extra cost.
Mr Mentha expressed sympathy for the workers, most of whom have been working part-time on reduced wages. "They have been taken to the top of the mountain, only to have fallen back down again ... It is a tragic day."
The administrators did not blame Mr Lew and Mr Fox for the breakdown in the talks, stressing that they had committed a team of 91 lawyers and worked non-stop to try to revive full-service operations to eight cities. But it is understood that they are considering a claim for breach of contract.
Mr Fox ruled out the syndicate seeking any other Ansett assets, which will now be sold to the highest bidders. "I don't think I've felt as bad about any commercial transaction in my life," he said.
Mr Lew and Mr Fox denied that their financial backers, the United States aviation investors David Bonderman and Bill Franke, had pulled out of the deal after merger talks with Virgin Blue broke down last Friday. They also rejected claims that vital bank backing had fallen down.
Tesna claimed that only one airport, Adelaide, had formally agreed to terms, with other operators demanding that rival airlines be allowed to share their terminal space.
Just six of 19 aircraft leases had been completed, it said.
These setbacks, together with the apparent failure of the administrators to pay $10 million in overdue lease payments to airport controllers, had convinced them to pull out of the deal.
They criticised what they saw as Sydney Airport's obstructive negotiating tactics and the Federal Government's lack of support, for killing the deal.
"In all of the circumstances, and to our great disappointment, time has run out," Mr Lew and Mr Fox said.
Meanwhile, Patrick's boss, Chris Corrigan, reaffirmed his interest in buying Ansett's maintenance and engineering divisions, comprising 2000 workers, and a majority stake in Virgin Blue.
But the budget carrier is looking at going it alone, taking Ansett's Sydney terminal.
Describing the death of Ansett as a tragedy, the ACTU secretary, Greg Combet, said of the Tesna chiefs: "I don't feel misled ... but on many occasions we've said, 'are you going to get the deal up?' Don't give people expectations ... if the deal can't be done."
The Prime Minister demanded answers on why the deal had died, but also hit back at accusations that the Government had helped scuttle the sale.
The Victorian Premier, Steve Bracks, accused the Federal Government of purposely derailing the deal.
"Whilst we had our shoulder to the wheel, while we wanted this outcome, the Federal Government was directly doing the opposite," he said.
"Behind the scenes, I think there is enough evidence to show that they did not want the Fox-Lew syndicate to get up."
[ 27 February 2002: Message edited by: Wirraway ]</p>
Ansett deal dead amid threats of legal action
By Darren Goodsir and Brad Norington
Ansett's administrators are considering legal action against the Tesna syndicate after it aborted its $3.6 billion takeover of the airline, forcing them to ground all flights after midnight on Monday.
The dramatic collapse of the deal, leaving 3000 workers without jobs, spells the death of the Ansett brand, 70 years after it first began flying.
Despite the administrators offering a deadline extension to Tesna's principals, Solomon Lew and Lindsay Fox - who had also just secured control of Ansett's Sydney terminal - the pair killed off the deal about 9.30pm on Tuesday, citing legal advice.
Hours earlier, during a night of mixed signals, Tesna had contacted the air safety regulator to demand the fast-tracking of its operator's certificate, saying it was ready to take over.
Sources close to the five-month sale process said that Mr Fox and Mr Lew had split at the last minute over financing. Although Mr Fox wanted to push ahead with the sale, due to be finalised tonight, his partner had reservations at using his own funds.
. .A Tesna spokesman last night rejected the charge, saying: "Every decision has been taken together and there was no difference between them."
The administrators, Mark Mentha and Mark Korda, said they were perplexed and "extremely disappointed" at why the sale had collapsed, adding that they were "ready, willing and able" to close the deal.
Because of healthy bookings over the weekend, they have vowed to keep running flights until at least Monday night. This will guarantee trips for about 70 per cent of booked passengers.
After that, travellers would be flown by Qantas and Virgin Blue, at no extra cost.
Mr Mentha expressed sympathy for the workers, most of whom have been working part-time on reduced wages. "They have been taken to the top of the mountain, only to have fallen back down again ... It is a tragic day."
The administrators did not blame Mr Lew and Mr Fox for the breakdown in the talks, stressing that they had committed a team of 91 lawyers and worked non-stop to try to revive full-service operations to eight cities. But it is understood that they are considering a claim for breach of contract.
Mr Fox ruled out the syndicate seeking any other Ansett assets, which will now be sold to the highest bidders. "I don't think I've felt as bad about any commercial transaction in my life," he said.
Mr Lew and Mr Fox denied that their financial backers, the United States aviation investors David Bonderman and Bill Franke, had pulled out of the deal after merger talks with Virgin Blue broke down last Friday. They also rejected claims that vital bank backing had fallen down.
Tesna claimed that only one airport, Adelaide, had formally agreed to terms, with other operators demanding that rival airlines be allowed to share their terminal space.
Just six of 19 aircraft leases had been completed, it said.
These setbacks, together with the apparent failure of the administrators to pay $10 million in overdue lease payments to airport controllers, had convinced them to pull out of the deal.
They criticised what they saw as Sydney Airport's obstructive negotiating tactics and the Federal Government's lack of support, for killing the deal.
"In all of the circumstances, and to our great disappointment, time has run out," Mr Lew and Mr Fox said.
Meanwhile, Patrick's boss, Chris Corrigan, reaffirmed his interest in buying Ansett's maintenance and engineering divisions, comprising 2000 workers, and a majority stake in Virgin Blue.
But the budget carrier is looking at going it alone, taking Ansett's Sydney terminal.
Describing the death of Ansett as a tragedy, the ACTU secretary, Greg Combet, said of the Tesna chiefs: "I don't feel misled ... but on many occasions we've said, 'are you going to get the deal up?' Don't give people expectations ... if the deal can't be done."
The Prime Minister demanded answers on why the deal had died, but also hit back at accusations that the Government had helped scuttle the sale.
The Victorian Premier, Steve Bracks, accused the Federal Government of purposely derailing the deal.
"Whilst we had our shoulder to the wheel, while we wanted this outcome, the Federal Government was directly doing the opposite," he said.
"Behind the scenes, I think there is enough evidence to show that they did not want the Fox-Lew syndicate to get up."
[ 27 February 2002: Message edited by: Wirraway ]</p>
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Thurs "Sydney Morning Herald"
Why Solly kissed it all goodbye. . . .It was so close... Brad Norington and Darren Goodsir examine why success was just out of reach.
. .So, does this spell the end to Lindsay Fox's business alliance with his buddie Solomon Lew? "On the contrary," Fox said yesterday - then planted a nice kiss on Lew's forehead.
This very public display of affection suggests that ties between two wily old characters of Australian business may survive their failed Ansett venture.
But their relationship appears to have been sorely tested in recent days.
Behind the scenes, it is believed, the two men had split on persisting with a deal that both had accepted, in November, as a "sale". According to sources involved in the negotiations, the reason for both men pulling out of their arrangement with Ansett's administrators was much more than disputes with airport officials over the lease of terminals.
Simply put, they say, Solly Lew got cold feet and felt unable to proceed. The reason is believed to have come down to money.
. .For months, Lew and Fox had been negotiating with banks. They had no backing, although the sale contract with Ansett's administrators did not depend on it.
As today's sale deadline neared - after an original postponement from January 31 - it appears that Lew had reservations about using his own funds. In the final hours before Lew and Fox's attempt to take control of a trimmed-down Ansett collapsed, just about all the key details were in place, the sources say.
After troubled negotiations over many weeks, the lucrative lease of the Sydney Airport terminal was agreed on Tuesday afternoon. Leases at other airports were still to be settled, but the administrators were willing to sign sub-leases to Tesna - Lew and Fox's takeover vehicle - until they were finalised.
All of Tesna's leases of aircraft were completed and awaiting only signatures; 55 managers and 2880 employees had accepted jobs; and call centres were ready to take bookings. As late as 6pm on Tuesday, Tesna's Bruce Byron contacted the Civil Aviation Safety Authority to demand the air operator's certificate for Lew-Fox's Ansett to be expedited.
Around the same time, Lew and Fox sent a fax to the administrators, Mark Mentha and Mark Korda, saying their deal was terminated.
After that shock, Mentha and Korda received another startling message, this time an email from the Sydney Airports Corporation confirming at last that the lease for the terminal had been settled. The deal was back on, they thought, and forwarded the email to Fox and Lew as confirmation that all was still on track.
The final death blow to Ansett was delivered personally at 9.30 that evening, in the plush surrounds of Century Plaza, headquarters to Lew's private company, high above Melbourne's CBD, on the 53rd floor of 101 Collins Street.
Lew and Fox summoned the ever-hopeful administrators to tell them the deal was finished.
When told they could have more time, Lew and Fox insisted it did not change the fact they could not complete the deal.
The signs of a faltering Ansett deal were apparent for many weeks. Earlier this month, the Tesna principals travelled to London to negotiate with Richard Branson about a partnership with Virgin Blue. Those talks failed.
At the same time, there was constant bickering over the final terms as Lew and Fox tried to beat down the price and escape from liabilities.
Why Solly kissed it all goodbye. . . .It was so close... Brad Norington and Darren Goodsir examine why success was just out of reach.
. .So, does this spell the end to Lindsay Fox's business alliance with his buddie Solomon Lew? "On the contrary," Fox said yesterday - then planted a nice kiss on Lew's forehead.
This very public display of affection suggests that ties between two wily old characters of Australian business may survive their failed Ansett venture.
But their relationship appears to have been sorely tested in recent days.
Behind the scenes, it is believed, the two men had split on persisting with a deal that both had accepted, in November, as a "sale". According to sources involved in the negotiations, the reason for both men pulling out of their arrangement with Ansett's administrators was much more than disputes with airport officials over the lease of terminals.
Simply put, they say, Solly Lew got cold feet and felt unable to proceed. The reason is believed to have come down to money.
. .For months, Lew and Fox had been negotiating with banks. They had no backing, although the sale contract with Ansett's administrators did not depend on it.
As today's sale deadline neared - after an original postponement from January 31 - it appears that Lew had reservations about using his own funds. In the final hours before Lew and Fox's attempt to take control of a trimmed-down Ansett collapsed, just about all the key details were in place, the sources say.
After troubled negotiations over many weeks, the lucrative lease of the Sydney Airport terminal was agreed on Tuesday afternoon. Leases at other airports were still to be settled, but the administrators were willing to sign sub-leases to Tesna - Lew and Fox's takeover vehicle - until they were finalised.
All of Tesna's leases of aircraft were completed and awaiting only signatures; 55 managers and 2880 employees had accepted jobs; and call centres were ready to take bookings. As late as 6pm on Tuesday, Tesna's Bruce Byron contacted the Civil Aviation Safety Authority to demand the air operator's certificate for Lew-Fox's Ansett to be expedited.
Around the same time, Lew and Fox sent a fax to the administrators, Mark Mentha and Mark Korda, saying their deal was terminated.
After that shock, Mentha and Korda received another startling message, this time an email from the Sydney Airports Corporation confirming at last that the lease for the terminal had been settled. The deal was back on, they thought, and forwarded the email to Fox and Lew as confirmation that all was still on track.
The final death blow to Ansett was delivered personally at 9.30 that evening, in the plush surrounds of Century Plaza, headquarters to Lew's private company, high above Melbourne's CBD, on the 53rd floor of 101 Collins Street.
Lew and Fox summoned the ever-hopeful administrators to tell them the deal was finished.
When told they could have more time, Lew and Fox insisted it did not change the fact they could not complete the deal.
The signs of a faltering Ansett deal were apparent for many weeks. Earlier this month, the Tesna principals travelled to London to negotiate with Richard Branson about a partnership with Virgin Blue. Those talks failed.
At the same time, there was constant bickering over the final terms as Lew and Fox tried to beat down the price and escape from liabilities.
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Thurs "Sydney Morning Herald"
Tesna's long, slow flight to nowhere . .If buying Ansett made commercial sense, Lew and Fox would be flying high today.
By Elizabeth Knight
Ansett has distinguished itself. The Ansett sale disaster has been as spectacular as was its operational collapse last year.
There is a point on the risk/reward curve that a deal tips from do-able to marginal. For Lew and Fox, the Ansett deal has reached this point. According to insiders, the writing was on the wall a few weeks ago, but no-one was conceding anything until yesterday, when the previously 100 per cent commitment disappeared, leaving a couple of administrators with a bankrupt airline and a lot of questions to answer.
Of course, there were some Tesna issues with third parties, like airports and aircraft leases, but these were sideshows. If buying Ansett made commercial sense, then Lew and Fox would be in a cockpit today posing for publicity shots in silly hats.
To suggest that everything caved in and the viability of the deal changed over the past couple of days is also naive.
There were so many different factors involved in negotiating this deal, and so many different assets and parties, that it was always fluid.
Had the administrators' deadline been a week later we would undoubtedly have reached the point we are at now - just in a week's time.
In the end this deal made sense for the administrators, the airports and the aircraft manufacturers, but not for the purchasers.
Clearly, Lew's and Fox's Tesna was trying to extract better deals out of third parties all over the place in order to improve the prospect that Ansett Mark II would make money.
The clearest evidence was its attempt to merge with Virgin. A market with only two airlines is a much safer bet than one with three operators. But Branson wanted money and Tesna wasn't offering him any.
Next, Tesna tried to renegotiate the price it was offering the administrators. Reference to this was not disputed by administrators yesterday.
There was rumour - albeit not substantiated - that Tesna had tried to change the financial security arrangements on the airport terminals and, in the process, negatively alter the position of the unions.
There was a view right from the start that buying Ansett's assets was risky.
And there has been a belief in the industry that many of Tesna's assumptions were ill-conceived.
Part of its business case centred on leasing terminal space and maintenance facilities. But it had no takers.
There is also talk that Tesna was not getting quite the deal with airline suppliers that it had originally bargained on.
Of course, there is the undisputed fact that a three-airline market has never worked profitably (for all three players).
Lew and Fox may have been wrong in their original contention that the economics of the original deal worked. A few weeks ago, despite all the public relations to the contrary, the Tesna syndicate was finding the deal harder to put together.
Tesna signed a contract to buy Ansett working on the premise it could get cheap planes (post September 11) and negotiate a better cost base with the unions.
In doing so, Lew and Fox were getting what was in effect an option on an exclusive negotiating right for Ansett for as long as the administrators were willing to extend the deadline.
And while Tesna has been stringing everyone along, this would not have happened if Lang Corp (now Patrick) had been able to stay in the game and enter a bidding war.
It's difficult to see how the administrators can now avoid taking legal action against Tesna and, in turn, how they will be safe from legal action from Ansett creditors.
Qantas, meanwhile, has played this game beautifully.
It wanted to buy the terminal space but wasn't prepared to buy it from Tesna. This would have been one of the major factors that altered the economics of the deal for Fox and Lew.
Just as importantly, Qantas stacked on $60 million of additional costs to grow capacity and market share. What Qantas boss Geoff Dixon is left with is the best possible outcome.
He always said there wasn't enough room for three players.
Given that Ansett was to operate at both the business and leisure end of the market it would have competed more directly with Qantas.
The market will now be shared between Virgin and, at the high margin end, by Qantas.
The full financial 2002 year profit for Qantas of $550 million will probably not be greatly affected, but analysts yesterday would have been busy revising upwards the 2003 earnings estimates.
The Qantas share price soared 10 per cent yesterday to $4.57, but it's still shy of the $5 levels it traded at before Virgin and Impulse came onto the scene at the end of 1999.
Now Qantas has a far bigger and more lucrative slice of the domestic market.
The overseas operations are suffering post September 11 but there are clear signs that international traffic has returned and there is an expectation that yields are also recovering.
Tesna's long, slow flight to nowhere . .If buying Ansett made commercial sense, Lew and Fox would be flying high today.
By Elizabeth Knight
Ansett has distinguished itself. The Ansett sale disaster has been as spectacular as was its operational collapse last year.
There is a point on the risk/reward curve that a deal tips from do-able to marginal. For Lew and Fox, the Ansett deal has reached this point. According to insiders, the writing was on the wall a few weeks ago, but no-one was conceding anything until yesterday, when the previously 100 per cent commitment disappeared, leaving a couple of administrators with a bankrupt airline and a lot of questions to answer.
Of course, there were some Tesna issues with third parties, like airports and aircraft leases, but these were sideshows. If buying Ansett made commercial sense, then Lew and Fox would be in a cockpit today posing for publicity shots in silly hats.
To suggest that everything caved in and the viability of the deal changed over the past couple of days is also naive.
There were so many different factors involved in negotiating this deal, and so many different assets and parties, that it was always fluid.
Had the administrators' deadline been a week later we would undoubtedly have reached the point we are at now - just in a week's time.
In the end this deal made sense for the administrators, the airports and the aircraft manufacturers, but not for the purchasers.
Clearly, Lew's and Fox's Tesna was trying to extract better deals out of third parties all over the place in order to improve the prospect that Ansett Mark II would make money.
The clearest evidence was its attempt to merge with Virgin. A market with only two airlines is a much safer bet than one with three operators. But Branson wanted money and Tesna wasn't offering him any.
Next, Tesna tried to renegotiate the price it was offering the administrators. Reference to this was not disputed by administrators yesterday.
There was rumour - albeit not substantiated - that Tesna had tried to change the financial security arrangements on the airport terminals and, in the process, negatively alter the position of the unions.
There was a view right from the start that buying Ansett's assets was risky.
And there has been a belief in the industry that many of Tesna's assumptions were ill-conceived.
Part of its business case centred on leasing terminal space and maintenance facilities. But it had no takers.
There is also talk that Tesna was not getting quite the deal with airline suppliers that it had originally bargained on.
Of course, there is the undisputed fact that a three-airline market has never worked profitably (for all three players).
Lew and Fox may have been wrong in their original contention that the economics of the original deal worked. A few weeks ago, despite all the public relations to the contrary, the Tesna syndicate was finding the deal harder to put together.
Tesna signed a contract to buy Ansett working on the premise it could get cheap planes (post September 11) and negotiate a better cost base with the unions.
In doing so, Lew and Fox were getting what was in effect an option on an exclusive negotiating right for Ansett for as long as the administrators were willing to extend the deadline.
And while Tesna has been stringing everyone along, this would not have happened if Lang Corp (now Patrick) had been able to stay in the game and enter a bidding war.
It's difficult to see how the administrators can now avoid taking legal action against Tesna and, in turn, how they will be safe from legal action from Ansett creditors.
Qantas, meanwhile, has played this game beautifully.
It wanted to buy the terminal space but wasn't prepared to buy it from Tesna. This would have been one of the major factors that altered the economics of the deal for Fox and Lew.
Just as importantly, Qantas stacked on $60 million of additional costs to grow capacity and market share. What Qantas boss Geoff Dixon is left with is the best possible outcome.
He always said there wasn't enough room for three players.
Given that Ansett was to operate at both the business and leisure end of the market it would have competed more directly with Qantas.
The market will now be shared between Virgin and, at the high margin end, by Qantas.
The full financial 2002 year profit for Qantas of $550 million will probably not be greatly affected, but analysts yesterday would have been busy revising upwards the 2003 earnings estimates.
The Qantas share price soared 10 per cent yesterday to $4.57, but it's still shy of the $5 levels it traded at before Virgin and Impulse came onto the scene at the end of 1999.
Now Qantas has a far bigger and more lucrative slice of the domestic market.
The overseas operations are suffering post September 11 but there are clear signs that international traffic has returned and there is an expectation that yields are also recovering.
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Thurs "The Australian"
All cashed up and no lease to buy. .By Cameron Stewart, Michael Bachelard and Richard Gluyas . .February 28, 2002
WHEN Ansett administrator Mark Korda stepped into a sunny Melbourne afternoon late on Monday, it was clear he had no idea what was about to hit him.
An optimistic Korda told the assembled journalists that although there were still last-minute issues to deal with, the sale of Ansett to tycoons Solomon Lew and Lindsay Fox was "looking as good as it has ever looked".
What Korda did not know was that at that moment, on the other side of town, a storm was gathering inside the headquarters of Solomon Lew.
Hours earlier, the Sydney Airports Corporation had said it would not transfer the lease of its Sydney terminal to the Fox-Lew Tesna syndicate until Tesna had agreed to buy the airline.
To Korda, this was merely an issue of process, rather than substance – something that could be sorted out in due course.
But in Lew's headquarters on the 51st floor of 101 Collins Street, the issue was – in the words of Fox – "the straw that broke the camel's back".
After five months of negotiations and with the deadline for the deal only 48 hours away, Lew and Fox believed they were about to buy Ansett without the necessary assets to run it. The two tycoons were stewing.
"I want to know which one of you would go out and pay for a cheque for $270 million without the certainty of an airport," Lew said yesterday. 'The problem was there was no certainty of settlement – there were no leases and no aircraft."
After sinking "tens of millions of dollars" and five months effort into reviving Ansett, Lew and Fox had not run out of money – they had run out of patience and time.
According to sources close to the Tesna bid, Lew and Fox talked with Korda on Tuesday morning to express their alarm about the situation and to clarify exactly what would – and would not – be ready in time for the sale deadline of midnight tonight.
The two then returned to Lew's headquarters and called in their small army of lawyers and advisers. For the rest of the afternoon the team worked – crunching numbers and drawing up a full picture of what they would be buying for $270 million.
Their answer was simple and conclusive – not enough.
"There is not a solicitor in Australia who would allow any of you people to pay a cheque if they couldn't give you a clear title on the property you were purchasing," Lew said. "Ours is pretty much that case on a larger scale."
By 6pm on Tuesday, Tesna's lawyers had drafted and delivered a letter of termination to the administrators – the bid to rescue Ansett was officially dead.
By 8pm, the administrators were at Lew's Collins Street offices in a last desperate bid to rescue the airline. They told Fox and Lew they had just received confirmation from Sydney airport that the lease for the terminal would be assigned in time.
But Fox and Lew refused to budge. Despite this, one source says they did agree to sleep on the matter – giving the administrators a sliver of hope.
At 10.30pm, ACTU secretary Greg Combet, a linchpin of the campaign to save Ansett, emerged from a dinner engagement and checked the messages on his mobile phone.
One was from the administrators: "It's in trouble. It looks like Fox and Lew might pull out."
Shocked, Combet hot-footed it to Ansett headquarters to help work out plans – how the service would be wound down, how the almost 3000 people to whom Tesna had offered jobs would be notified.
He got home in the early hours of the morning, still hoping that somehow the situation could be recovered.
But at 8.30am yesterday, he put a call in to Lew's private line. The answer was no, the deal was definitely off.
Lew called Victorian Premier Steve Bracks to deliver the same message – time had run out.
The rescue had failed. Ansett was finally grounded.
All cashed up and no lease to buy. .By Cameron Stewart, Michael Bachelard and Richard Gluyas . .February 28, 2002
WHEN Ansett administrator Mark Korda stepped into a sunny Melbourne afternoon late on Monday, it was clear he had no idea what was about to hit him.
An optimistic Korda told the assembled journalists that although there were still last-minute issues to deal with, the sale of Ansett to tycoons Solomon Lew and Lindsay Fox was "looking as good as it has ever looked".
What Korda did not know was that at that moment, on the other side of town, a storm was gathering inside the headquarters of Solomon Lew.
Hours earlier, the Sydney Airports Corporation had said it would not transfer the lease of its Sydney terminal to the Fox-Lew Tesna syndicate until Tesna had agreed to buy the airline.
To Korda, this was merely an issue of process, rather than substance – something that could be sorted out in due course.
But in Lew's headquarters on the 51st floor of 101 Collins Street, the issue was – in the words of Fox – "the straw that broke the camel's back".
After five months of negotiations and with the deadline for the deal only 48 hours away, Lew and Fox believed they were about to buy Ansett without the necessary assets to run it. The two tycoons were stewing.
"I want to know which one of you would go out and pay for a cheque for $270 million without the certainty of an airport," Lew said yesterday. 'The problem was there was no certainty of settlement – there were no leases and no aircraft."
After sinking "tens of millions of dollars" and five months effort into reviving Ansett, Lew and Fox had not run out of money – they had run out of patience and time.
According to sources close to the Tesna bid, Lew and Fox talked with Korda on Tuesday morning to express their alarm about the situation and to clarify exactly what would – and would not – be ready in time for the sale deadline of midnight tonight.
The two then returned to Lew's headquarters and called in their small army of lawyers and advisers. For the rest of the afternoon the team worked – crunching numbers and drawing up a full picture of what they would be buying for $270 million.
Their answer was simple and conclusive – not enough.
"There is not a solicitor in Australia who would allow any of you people to pay a cheque if they couldn't give you a clear title on the property you were purchasing," Lew said. "Ours is pretty much that case on a larger scale."
By 6pm on Tuesday, Tesna's lawyers had drafted and delivered a letter of termination to the administrators – the bid to rescue Ansett was officially dead.
By 8pm, the administrators were at Lew's Collins Street offices in a last desperate bid to rescue the airline. They told Fox and Lew they had just received confirmation from Sydney airport that the lease for the terminal would be assigned in time.
But Fox and Lew refused to budge. Despite this, one source says they did agree to sleep on the matter – giving the administrators a sliver of hope.
At 10.30pm, ACTU secretary Greg Combet, a linchpin of the campaign to save Ansett, emerged from a dinner engagement and checked the messages on his mobile phone.
One was from the administrators: "It's in trouble. It looks like Fox and Lew might pull out."
Shocked, Combet hot-footed it to Ansett headquarters to help work out plans – how the service would be wound down, how the almost 3000 people to whom Tesna had offered jobs would be notified.
He got home in the early hours of the morning, still hoping that somehow the situation could be recovered.
But at 8.30am yesterday, he put a call in to Lew's private line. The answer was no, the deal was definitely off.
Lew called Victorian Premier Steve Bracks to deliver the same message – time had run out.
The rescue had failed. Ansett was finally grounded.
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This deal was soured from the start and only last week some friends in the finance/banking sector were talking of their respective companies putting into place plans for providing finance for alternate parties to purchase what was now the Ansett Sydney Airport Terminal.
Lets look at some facts:
- Fox/Lew never really put their own money in and were never serious in the first place.
- Andersens/Fox-Lew had more than adequate time to organise leases/negotiate terminal agreements/organise an AOC if they were both committed and genuinely serious.. .So much for the team of 99 lawyers!
- Aircraft deals fell through and it turned out these were letters of intent only and no actual money had been over to secure these orders.
- Bickering over the price of Ansett with Tesna was evident from the outset and this was also a sticking point with SACL for Sydney Brisbane/Melbourne Airports which ultimately were never signed off with.. .Fox/Lew were still trying to screw the price down and avoid letting Virgin Blue use part of their Sydney Terminal!
- The fact that negotiations were held with Virgin Blue over a tie- up or commercial agreement must have rang alarm bells in most people's minds as this said alot about Tesna's viability to survive by itself.
Combine these with the fact that when Patrick Corp approached the Administrators with a genuine offer for Terminal leases they were told by one of the Marks " I'm sorry, Ansett has been sold ".. .As a consequence of no money being put down as such by the Tesna consortium,I reackon this puts Andersen's in a prime position for massive litigation by it's creditors.
It looks like after the Enron collapse in the USA, HIH and One-Tel in Oz and finally Ansett this puts Andersens in a very poor light and they themselves may not survive this.
In the real world if you are serious about buying a business you outlay money for a deposit,do your due diligence (normally first)and have a legal team that does everything by the book.. .Everything about this deal was fishy from the start,had everyone caught up in the hype and was accurately predicted by a number of journalists in the business field that copped a fair bit of flack for going hard on Tesna - and rightly so it turns out.
Trevor Jensen leaving Ansett was like the proverbial rat jumping the sinking ship - and now to Qantas's advantage with alot of info on Air NZ.
To the troops left over by all of this debacle good luck to you all and may the good deeds of Sir Reginald Ansett and the staff that contributed to this airline since its inception not be forgotten.
Lets look at some facts:
- Fox/Lew never really put their own money in and were never serious in the first place.
- Andersens/Fox-Lew had more than adequate time to organise leases/negotiate terminal agreements/organise an AOC if they were both committed and genuinely serious.. .So much for the team of 99 lawyers!
- Aircraft deals fell through and it turned out these were letters of intent only and no actual money had been over to secure these orders.
- Bickering over the price of Ansett with Tesna was evident from the outset and this was also a sticking point with SACL for Sydney Brisbane/Melbourne Airports which ultimately were never signed off with.. .Fox/Lew were still trying to screw the price down and avoid letting Virgin Blue use part of their Sydney Terminal!
- The fact that negotiations were held with Virgin Blue over a tie- up or commercial agreement must have rang alarm bells in most people's minds as this said alot about Tesna's viability to survive by itself.
Combine these with the fact that when Patrick Corp approached the Administrators with a genuine offer for Terminal leases they were told by one of the Marks " I'm sorry, Ansett has been sold ".. .As a consequence of no money being put down as such by the Tesna consortium,I reackon this puts Andersen's in a prime position for massive litigation by it's creditors.
It looks like after the Enron collapse in the USA, HIH and One-Tel in Oz and finally Ansett this puts Andersens in a very poor light and they themselves may not survive this.
In the real world if you are serious about buying a business you outlay money for a deposit,do your due diligence (normally first)and have a legal team that does everything by the book.. .Everything about this deal was fishy from the start,had everyone caught up in the hype and was accurately predicted by a number of journalists in the business field that copped a fair bit of flack for going hard on Tesna - and rightly so it turns out.
Trevor Jensen leaving Ansett was like the proverbial rat jumping the sinking ship - and now to Qantas's advantage with alot of info on Air NZ.
To the troops left over by all of this debacle good luck to you all and may the good deeds of Sir Reginald Ansett and the staff that contributed to this airline since its inception not be forgotten.
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Fact:Ansett was never going to be financially viable.It does'nt need a rocket scientist or a graduate from the Harvard School of Economics to figure that Ansett was a dud.I know this is now written with the availability of hindsight but there were plenty around with the FORSIGHT to see that this was never going to happen.I now hope that staff recieve their entitlements promptly in what will now turn into a lawyers picnic.
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You've got to hand it to Terry McCrann. The garden gnome knows what he is talking about, having predicted the end game and giving the reasons why.. .Anyone wondering WHY it happened read the garden gnomes writings in the Murdoch press.
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AAP
Fox on the run. .Daily Telegraph. .01mar02
LINDSAY Fox last night was on the run from the collapse of his $450 million Ansett rescue deal, postponing first-class flights to Europe for him and his family in an effort to avoid further public scrutiny.
The flight postponements came as hundreds of Ansett employees, including flight attendant Anna Hickson, who only got her job back last Friday after losing it in the initial collapse, began their last remaining shifts without hope of a last-minute reprieve.
In a bid to flee Australia undetected amid the growing controversy over the last-minute collapse of the Ansett sale to Tesna, Mr Fox was understood to have changed his holiday flight plans several times yesterday.
He and his family had planned to fly out to begin an opulent skiing holiday. But angry Ansett staff turned on him, divulging details of his plans after being told by the airline's beleaguered administrators they would be stood down on Tuesday.
A source within the Tesna camp would only say that "due to the current circumstances" Mr Fox had decided to defer the extravagant family holiday.
They originally had been due to fly out from Melbourne's Tullamarine airport at 5pm. The source gave no commitment that Mr Fox would remain in Australia beyond today.
It was claimed that the Fox family's booking for the flights to Europe had been made more than six months ago. "What we had been anticipating was that Tesna management would have taken over Ansett by this time," the source said.
But instead, Mr Fox and his partner in the Tesna consortium, retail baron Solomon Lew, were attacked over the collapse of their "sale" agreement just 48 hours before they were due to take control.
Deputy Prime Minister John Anderson criticised their attempts to blame the Government and Sydney Airport for the deal's demise.
"If the Government was supposed to do more, that of course means taxpayers' money," Mr Anderson said on Channel 7's Sunrise program. "We've always made it plain that we don't believe the Government should either purchase or guarantee or under write, with taxpayers' money, players in the the private sector, in aviation."
But Mr Fox yesterday said the Government had failed to help revive Ansett, partly because protesting airline workers had embarrassed ministers during last year's election campaign.
The Government was against the Tesna deal because it believed the millionaires were too closely aligned with unions.
"The Government has seen our transaction as ACTU Airlines and because of that, the games played behind the scenes have been quite substantial," Mr Fox told Melbourne radio station 3AW.
Mr Fox, who was not available to talk to The Daily Telegraph yesterday, said "the Prime Minister said prior to the election the first thing after his election he would be prepared to resolve the Ansett problem, and we haven't seen or heard of him, other than one meeting that we had in Canberra".
But Mr Anderson said Mr Fox had his phone numbers. Mr Anderson also refuted Tesna's contention that Sydney airport was in part responsible for the demise of the deal.
Mr Fox had said the management of Sydney Airport stalled negotiations to transfer the Ansett terminal lease to Tesna from the administrators for the benefit of Sydney Airport. Mr Anderson replied: "Attempts to somehow or other fit up the issue of the terminal lease at Sydney airport, I'm sorry to say, will simply not wash with me."
The administrators meanwhile left the way open yesterday for legal action against Tesna.
Sources within the administration said Mark Mentha and Mark Korda had begun investigating the millionaire pair's claim the management teams of major airports, primarily Sydney airport, were responsible for the deal's collapse.
While it appeared there was no formal contract with Tesna once creditors approved the sale late in January, administrator Mark Korda yesterday said the deal had been deferred 28 days after he insisted on a day-by-day deadline to give the administrators an out.
"Technically, the contract gets extended day by day and they're not in breach of that contract. But we've got time to think about a lot of issues [as] certain facts are becoming available to us," Mr Korda said.
At the same time at least one group of creditors was calling for the administrators to be replaced. Qantas also denied it ever acted in a way to cause the demise of its one-time competitor.
Fox on the run. .Daily Telegraph. .01mar02
LINDSAY Fox last night was on the run from the collapse of his $450 million Ansett rescue deal, postponing first-class flights to Europe for him and his family in an effort to avoid further public scrutiny.
The flight postponements came as hundreds of Ansett employees, including flight attendant Anna Hickson, who only got her job back last Friday after losing it in the initial collapse, began their last remaining shifts without hope of a last-minute reprieve.
In a bid to flee Australia undetected amid the growing controversy over the last-minute collapse of the Ansett sale to Tesna, Mr Fox was understood to have changed his holiday flight plans several times yesterday.
He and his family had planned to fly out to begin an opulent skiing holiday. But angry Ansett staff turned on him, divulging details of his plans after being told by the airline's beleaguered administrators they would be stood down on Tuesday.
A source within the Tesna camp would only say that "due to the current circumstances" Mr Fox had decided to defer the extravagant family holiday.
They originally had been due to fly out from Melbourne's Tullamarine airport at 5pm. The source gave no commitment that Mr Fox would remain in Australia beyond today.
It was claimed that the Fox family's booking for the flights to Europe had been made more than six months ago. "What we had been anticipating was that Tesna management would have taken over Ansett by this time," the source said.
But instead, Mr Fox and his partner in the Tesna consortium, retail baron Solomon Lew, were attacked over the collapse of their "sale" agreement just 48 hours before they were due to take control.
Deputy Prime Minister John Anderson criticised their attempts to blame the Government and Sydney Airport for the deal's demise.
"If the Government was supposed to do more, that of course means taxpayers' money," Mr Anderson said on Channel 7's Sunrise program. "We've always made it plain that we don't believe the Government should either purchase or guarantee or under write, with taxpayers' money, players in the the private sector, in aviation."
But Mr Fox yesterday said the Government had failed to help revive Ansett, partly because protesting airline workers had embarrassed ministers during last year's election campaign.
The Government was against the Tesna deal because it believed the millionaires were too closely aligned with unions.
"The Government has seen our transaction as ACTU Airlines and because of that, the games played behind the scenes have been quite substantial," Mr Fox told Melbourne radio station 3AW.
Mr Fox, who was not available to talk to The Daily Telegraph yesterday, said "the Prime Minister said prior to the election the first thing after his election he would be prepared to resolve the Ansett problem, and we haven't seen or heard of him, other than one meeting that we had in Canberra".
But Mr Anderson said Mr Fox had his phone numbers. Mr Anderson also refuted Tesna's contention that Sydney airport was in part responsible for the demise of the deal.
Mr Fox had said the management of Sydney Airport stalled negotiations to transfer the Ansett terminal lease to Tesna from the administrators for the benefit of Sydney Airport. Mr Anderson replied: "Attempts to somehow or other fit up the issue of the terminal lease at Sydney airport, I'm sorry to say, will simply not wash with me."
The administrators meanwhile left the way open yesterday for legal action against Tesna.
Sources within the administration said Mark Mentha and Mark Korda had begun investigating the millionaire pair's claim the management teams of major airports, primarily Sydney airport, were responsible for the deal's collapse.
While it appeared there was no formal contract with Tesna once creditors approved the sale late in January, administrator Mark Korda yesterday said the deal had been deferred 28 days after he insisted on a day-by-day deadline to give the administrators an out.
"Technically, the contract gets extended day by day and they're not in breach of that contract. But we've got time to think about a lot of issues [as] certain facts are becoming available to us," Mr Korda said.
At the same time at least one group of creditors was calling for the administrators to be replaced. Qantas also denied it ever acted in a way to cause the demise of its one-time competitor.
