Breakfast Deals: Coppin goes shoppin'

Wilson HTM managing director Andrew Coppin quits as he mulls buying the company out, while Recall's listing plans look a winner for Brambles.

No sooner had Wilson HTM boss Andrew Coppin – the stockbroker’s fourth boss in about three years – been cleared of allegations of “inappropriate behaviour”, he’s stepped down because he’s thinking about buying the company out. And that makes five chiefs in three years. Meanwhile, Brambles has pulled the demerger trigger on Recall, ANZ Bank has gone ahead with a hybrid issue and Rafferty’s Garden has quickly found a home, post-Heinz bid.

Wilson HTM, Andrew Coppin

Stockbroker Wilson HTM has been through a hell of a time over the last six months or so and it looks likely to continue for a little while longer.

Managing director Andrew Coppin has resigned, but not due to a completion of an investigation into allegations from two former female staff of “inappropriate behaviour”. That investigation, which began in April, failed to support the claims.

Wilson HTM said in a statement to the market that Coppin has expressed an interest in potentially buying out the stockbroker.

“The board and Mr Coppin have agreed it is not appropriate for him to pursue any potential buyout while remaining managing director,” the company said.

“Accordingly, Mr Coppin has resigned to avoid a potential conflict of interest, with his resignation effective immediately.”

Coppin has been replaced by head of priority funds and former board member Sandy Grant, who has been with the company since 1992.

Chairman Steven Skala expressed his confidence in Grant, the fifth Wilson HTM boss in about three years. The stockbroker says it hasn’t received a proposal from Coppin yet.

Wilson HTM shares have slumped right back to the levels they were trading at in October last year. An enormous surge towards 40 cents on the back of the global equity buying in the lead up to Christmas and throughout the first quarter of 2013 has been completely unwound.

Corporate raider Mariner Corporation jumped on for the ride with an opportunistic offer for Wilson HTM that ended up finishing in the same fashion as its offer for Austock – with embarrassment.

Brambles, Recall

Brambles has finally loaded up its US document management business Recall for shipment, with a demerger picked as the vehicle of choice.

The pallet company’s shareholders are expected to get a chance to vote on the demerger proposal in December and the independently listed company could be trading on the ASX by early 2014.

Brambles wants to focus on its pooling solutions business, which delivers reusable CHEP and IFCO pallets, crates and containers to industry customers.

“Demerging Recall is a strategic decision,” chief executive Tom Gorman said after the announcement.

“The pooling business, we believe, has higher growth potential and, long term, higher return on capital opportunities … and it would be the wrong thing to keep Recall in that environment.”

It was about a year ago that Brambles gave up its efforts to sell Recall outright. UBS and Bank of America-Merrill Lynch were brought in to assist with the sales effort and reportedly managed to turn up some strong interest from US private equity firms Apollo Global Management and Birch Hill.

But at the end of the day, Brambles wanted at least $2 billion for the business and the suitors weren’t willing to pay it.

Shareholders will not begrudge Gorman for holding on to Recall. Throughout the attempted sale period the market wasn’t in a great state and it was agreed that Brambles would be better to raise capital – which it did, to the tune of $448 million – and wait for a better opportunity to offload the business.

The capital raising didn’t get off to a good start with only 83 per cent of institutions taking up their entitlements, which kicked the stock down 5 per cent. Since then, Brambles stock has mounted a steady but relentless march upwards to be 49 per cent higher.

With those sorts of numbers, Gorman can afford to do whatever he damn pleases.

It’s a bit too early to speculate on what an as yet unlisted company will be valued at come early 2014. But using fairly conservative industry multiples shows it should come in at around $1.8 billion to $2 billion.

After that, Gorman will have 20 per cent more time to devote to Brambles’ main business. It’s early days, but this deal makes a lot of sense.

ANZ Hybrid Capital Notes

ANZ Banking Group has indeed stepped in front of Westpac Banking Corporation with a $750 million hybrid notes offer that is expected to open up on July 10.

The Melbourne-based bank’s 10-year notes offer is paying an expected 3.4-3.6 per cent over the bank bill swap rate. ANZ has left the door open for a larger issue, which would not be surprising given that similar proposals have been expanded – sometimes doubled.

ANZ Securities, Citigroup, Commonwealth Bank of Australia, JPMorgan, National Australia Bank and RBS Morgans have been appointed as joint lead managers. Meanwhile, Bell Potter, Morgan Stanley Wealth Management and Ord Minnett have been named as co-managers.

The notes qualify under the Basel III “additional” Tier 1 capital rules and will convert to shares in September 2023, unless one of a few things happens.

The bank will convert the notes into shares earlier if the common equity-tier 1 ratio falls below 5.125 per cent.

The bank also has the option to redeem the notes for cash or equity after eight years.

ANZ will use the proceeds for general corporate purposes. It’s thought that Westpac is planning something very similar.

Rafferty’s Garden, Cussons

Baby food company Rafferty’s Garden has been gobbled up by PZ Cussons, the owner of brands like Morning Fresh, Radiant and Imperial Leather in Australia, less than a month after an offer from global giant Heinz was knocked by regulators.

Cussons will hand over about $70 million for Rafferty’s from current private equity owner Anacacia Capital.

The buyer will count itself lucky that the Australian Competition and Consumer Commission blocked the US major from combining its own major baby food business in Australia with Rafferty’s.

The Australian company boasts about 40 per cent of the domestic market.

Rio Tinto, OZ Minerals, Sandfire Resources

OZ Minerals is thought to be going up against The Carlyle Group for the Northparkes copper-gold mine in New South Wales that’s being flogged by Rio Tinto, according to The Australian Financial Review.

Shareholders have been agitating OZ boss Terry Burgess to deploy the company’s warchest on something – anything – to fill the possible production gap between its Prominent Hill project and incoming Carrapateena project.

Burgess has resisted calls to take out Sandfire Resources, which OZ holds a 19 per cent stake in, with the same argument he’s dismissed most ideas with: ‘If we rush this, we could really regret it’.

The seller, Rio Tinto, is a prime example. It’s trying to get rid of its Mozambique coal business and its long-maligned Pacific Aluminium business. Burgess wanted, above all else, to make sure OZ was never condemned to the same fate.

Wrapping up

Billionaire Gina Rinehart and the family of her late father’s former business partner Peter Wright will end up having their ownership dispute of iron ore assets in the Pilbara being decided in court.

Rinehart instructed her lawyers to try to get the case concerning a number of assets including Hope Downs 4 thrown out, but that move was rejected by West Australia Supreme Court judge Rene Le Miere.

While we’re on iron ore, Gindalbie Metals got a reprieve yesterday with the announcement that it has received an $84 million cash injection from Chinese partner Ansteel as bridging finance, so it can continue kicking its Kagara project into gear.

The stock jumped 8.3 per cent on the news.

Elsewhere in resources, Origin Energy has finished the sale of gas metering business Vector Group’s Advanced Metering Assets for $NZ59.9 million ($50.7 million).

The deal was first announced by Contact Energy, which Origin owns 53.1 per cent in, back in October last year.

In retail, National Australia Bank has sold its debt in Billabong International to Bank of America-Merrill Lynch, according to The Australian Financial Review.

This makes ANZ Banking Group the only of the big four to still count itself as a lender to the surfwear company.

And finally, Decmil Group shares surged 10 per cent yesterday after announcing a $137 million contract to build an asylum seeker village in Papua New Guinea.

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