Warning on Becton projects
Failure to strike a deal with Goldman Sachs - which last week bought the $200 million debt owed by Becton to Bank of Scotland International (BOSI) for just $100 million - could also see the future of New South Wales' $1.2 billion Bonnyrigg social housing project thrown into doubt.
Becton is the builder of the Bonnyrigg project in Sydney's western suburbs, where an 81-hectare state government-owned housing estate is being turned into 2433 dwellings.
Should Becton be put into receivership by Goldman Sachs, the construction company could be forced out of the project.
"If Becton and Goldman Sachs can work together, Becton can once again be a powerful player in property," Mr Olney-Fraser said. "If Goldman Sachs uses this deal with BOSI to put Becton into receivership, the project at Bonnyrigg will be adversely affected.
"This would have a big impact on the many families that Becton is helping in partnership with the NSW government."
Becton - once a giant of the Australian construction industry with a market capitalisation of more than $4 billion - now has just $300 million of assets on its books, $300 million of debt, and a market value of $3.4 million.
Those remaining assets include more than 1000 units in retirement villages in Melbourne and Sydney, valued at an estimated $150 million.
Key retirement village assets in Melbourne include Classic Residences of Brighton, Menzies Malvern and the Waverley Country Club in Rowville.
"History shows that if a retirement village falls into receivership, there is a major impact on unit values," Mr Olney-Fraser said. "No potential buyer wants the uncertainty of buying into a village that is controlled by a receiver, or has recently been in receivership."
Mr Olney-Fraser's company, Mariner, is the largest shareholder in Becton, with 18 per cent of the company's shares. On Monday, Mariner will seek shareholder approval to exercise options that will take its stake in Becton to 30 per cent.
Mr Olney-Fraser will also make a second attempt to join the board.
In November, Mariner chairman Donald Christie joined the board of Becton, but BOSI objected to Mr Olney-Fraser taking a second seat, stating that Mariner could exert too much control.
"Mariner wants two directors on the Becton board, and we won't stop until we get them on," Mr Olney-Fraser said. "We will convert our options to shares, taking Mariner's shareholding in Becton to about 30 per cent, making it the largest shareholder of Becton."
As the battle for control of Becton heats up, Mr Olney-Fraser has taken a swipe at the pay packet of Becton chief executive Matthew Chun.
"It's time for Matthew Chun to deliver something out of the BOSI debt sale for shareholders. He has done a great job keeping Becton alive post-GFC, but shareholders have been smashed along the way," he said. "Mr Chun's $1 million salary is about one-third of the company's market capitalisation, and I can't understand how the board can justify that."
Mr Chun said he was unable to comment on Mr Olney-Fraser's remarks as Becton was in the midst of a trading halt and due to make a statement to the ASX on Monday.
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The article reports that Bonnyrigg — an 81‑hectare NSW government estate being redeveloped into 2,433 dwellings with Becton as the builder — could be thrown into doubt if lender Goldman Sachs puts Becton into receivership after buying Becton's debt. Receivership could force Becton out of the project and disrupt progress.
Goldman Sachs bought the $200 million of debt Becton owed to Bank of Scotland International (BOSI) for about $100 million, according to the article. That purchase gives Goldman Sachs control of the debt and the ability to appoint receivers if it chooses — an outcome that could materially affect Becton’s assets, ongoing projects and investor returns.
Darren Olney‑Fraser warned in the article that apartment prices at Becton housing projects and unit values in retirement villages could plunge if Becton goes into receivership. He said evidence shows buyers avoid villages under receiver control, which tends to depress unit values and makes resale harder.
The article states Becton now has about $300 million of assets and $300 million of debt, with a market value near $3.4 million. Remaining assets include more than 1,000 retirement village units in Melbourne and Sydney valued at an estimated $150 million, including Classic Residences of Brighton, Menzies Malvern and the Waverley Country Club in Rowville.
Mariner, led by corporate raider Darren Olney‑Fraser, is Becton’s largest shareholder with an 18% stake. The article says Mariner will seek shareholder approval to exercise options to take its stake to about 30% and will attempt to add a second director to Becton’s board to increase its influence.
According to the article, BOSI previously objected to Darren Olney‑Fraser taking a second board seat because it believed Mariner could exert too much control. Mariner says it wants two directors on the board and plans to push for them.
Olney‑Fraser criticised CEO Matthew Chun’s pay, saying Chun’s $1 million salary is about one‑third of the company’s market capitalisation and questioning how the board can justify it given shareholder losses. The article notes Mr Chun was unable to comment because Becton was in a trading halt and due to make an ASX statement.
The article highlights several near‑term developments for investors to watch: any negotiations or deal between Becton and Goldman Sachs over the debt, the possibility Goldman Sachs appointing receivers, Mariner’s shareholder vote to convert options and increase its stake (scheduled for Monday), and Becton’s ASX statement following the trading halt.
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