InvestSMART

Ansett memories turned into Gold

Any sentimental former Ansett shareholders or creditors desperate to revive their memories of the fallen carrier could soon be offered a new investment opportunity.

Any sentimental former Ansett shareholders or creditors desperate to revive their memories of the fallen carrier could soon be offered a new investment opportunity.

A former Ansett employee who has been working on plans to launch his airline RMA Gold Airways for the past seven years, has signalled his intentions to raise $600 million on the heels of the 10th anniversary of the Ansett collapse. This would make the listing bigger than Virgin Blue's $439 million IPO in 2003.

"We are currently targeting an IPO [initial public offer] as early as September 13," Gold's founder Jens Buche told CBD.

Buche said it was purely coincidental the airline (headquartered in the Melbourne suburb of Ascot Vale) wanted to kick off its public offer the day after the 10th anniversary of Ansett going into administration.

With the RMA in Gold Airways standing for the Australian airline pioneer Reg Miles Ansett, Buche said his airline was not trying to capitalise on Ansett's history. He said it was trying to "indicate that what we're doing is that we're trying to move on and provide the general public with an airline that they can relate to with the good product that Ansett had out there".

"There is an affinity with what Reg Ansett stood for," Buche said. "I think plenty was said about Ansett that used to be negative but I think you can also write about all the good things Ansett did for this country."

Despite Gold not having any planes in its fleet nor an air operator certificate, Buche was upbeat about the planned IPO. Even with Qantas shares recently hitting a record low, he said: "I don't think there are too many clever people around that know exactly when airline shares will take off."

Asked if any investment banks were advising on the listing, Buche said: "That I can't just explain at the moment. I am not in a position to actually make a public statement about that at the moment.

"There may not be enough money in Australia for this airline," he said, hinting that there could be plenty of offshore interest.

SIMPLE MATH

One positive that could help Gold attract investors is its low operating cost. The airline's accounts for the year to June 30 show it broke even for the period. This was helped by Gold having no borrowing costs, no employee expenses and no other costs. Revenues for the period were also flat at zilch.

RIGHT MAN?

It can be really tough retaining staff if you are a loss-making property concern unable to dole out annual cash bonuses. That is why you need to keep handing out other types of cash incentives to keep executives happy in their jobs.

The entity formerly known as Babcock & Brown Residential Land Partners Group yesterday disclosed it had paid its chief executive David Wightman a $150,000 cash retention payment last financial year on top of his $400,000 base salary. His total pay was $565,200.

By being retained by RCL Group (aka Residential Community Living), the former Babcock & Brown executive was able to hang around to see the company post a fivefold increase in full-year net losses to $35.8 million.

"In order to retain a number of key employees in challenging financial and employment markets and considering the uncertainty around the group's ability to continue as a going concern, in December 2010 the board ... made to a small number of key senior employees a retention payment," RCL explained in its annual accounts.

In the years when the fund was performing better (before the credit crunch), Wightman needed less money to help manage RCL.

In the 2007 financial year when he served as RCL's chief investment officer, when it was still managed by Babcock & Brown, he was paid a fee of $200,000. His fees jumped to $300,000 in 2008-09.

In the financial year after the management agreement with Babcock & Brown was severed in mid-2009 (and when Wightman became chief executive), he received a $222,115 redundancy payment "as a result of having left Babcock & Brown". That took his total remuneration for the 2010 financial year to $625,036. RCL has seen its shares slip 95 per cent since their mid-2006 listing.

FUZZY LOGIC

Another struggling property concern keen to retain its chief executive is Trafalgar Corporate. The company, which reported a $3 million full-year loss, disclosed it had paid its chief executive Braith Williams a $425,000 retention payment in July 2010.

This followed on from the deferred and "additional" $318,750 fee he earned when he took up the acting chief executive role in 2007. In all, Williams received $640,057 in pay for the 2011 financial year.

Trafalgar also noted it had extended the potential severance payment to Williams from six months to nine months pay. The termination notice for Trafalgar's chief financial officer Peter Norris was extended from one month to six months pay.

"These changes were considered necessary in order to ensure their knowledge and expertise was retained, as group asset sales were realised and the group's activities were wound down," Trafalgar said in its accounts.

Seems logical to retain someone by increasing their potential termination package.

FALL FROM GLORY

The Australian Securities Exchange meanwhile held an emotional farewell for some of the market's best known dogs. The bourse yesterday announced it had removed Compass Hotel Group, the former Warren Entsch-chaired CEC Group, the former David Koch-headed publisher Palamedia (aka My Money Group), Willmott Forests and Timbercorp for not paying their annual listing fees.

Sadly Palamedia has never managed to reach the full potential once envisaged by former part-owner Koch, who hosts the Sunrise morning show. Since Koch said "the rate of change is not going to slow" in the 2000 annual report, the company which publishes Insto magazine has gone on to rack up losses of more than $30 million.

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