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Brickworks to review ties with Soul Patts

THE Brickworks chairman, Robert Millner, has defended the company's four-decade long "strategic alliance" with conglomerate Washington H. Soul Pattinson, but said it has hired an external adviser to review its structure and gauge options to unlock shareholder value.

THE Brickworks chairman, Robert Millner, has defended the company's four-decade long "strategic alliance" with conglomerate Washington H. Soul Pattinson, but said it has hired an external adviser to review its structure and gauge options to unlock shareholder value.

Mr Millner made his comments at the brickmaker's annual meeting, which was marked by what he said were "uncalled for" questions about corporate governance, the role of its independent directors and his family's grip on both companies.

The prominent fund manager Matt Williams from Perpetual Investments challenged Brickworks' independents over their lack of support for his push to nominate an outside director to the Soul Patts board, and questioned why they had decided to back the re-election of Mr Millner's son Thomas instead of Perpetual's nominee, the Sydney corporate adviser Robert Fraser.

"[The] chairman is out of the room with his cousin the deputy chairman, but effectively he is right in the room because you're taking the recommendations of Soul Pattinson," Mr Williams said. "That's a pretty disappointing attitude for independent directors to take."

The independent directors had met separately and taken "the independent view to follow the Soul Patts recommendation" to back Thomas Millner, countered one of them, Robert Webster, saying the conglomerate had delivered "fantastic results over a long period of time".

Perpetual, which has about $600 million invested in Brickworks and Soul Patts holding 12 per cent stakes in each, is seeking to weaken the Millner family's control of both boards to break the cross shareholding between the companies.

Brickworks owns 43 per cent of Soul Patts, while Soul Patts holds 44 per cent of Brickworks. With just about 8 per cent of the equity, the Millner family dominates both boards and can use the crossholding to effectively dash any motions by other shareholders.

Perpetual says the crossholding has held back the valuations of both stocks $1.5 billion in underlying value could be realised unwinding the arrangement. But Brickworks and Soul Patts say it has acted to smooth out economic cycles and brought "superior returns".

Robert Millner would not say who Brickworks' independent adviser was, but that any decisions would be made when the outcome of the process to sell its 60 per cent stake in Queensland miner New Hope was known. Brickwork' managing director, Lindsay Partridge, said the December-half result should be similar to the six months to June, propped up by the investment in Soul Patts. But building products would deliver lower earnings due to the weak housing markets, with revenue from the division down 10 per cent in the first quarter.

Brickworks' earnings before interest and tax slumped 12 per cent to $132 million in the past financial year. The company has sacked 239 workers since August last year. Its workforce of 1328 would "unfortunately reduce further," he said.


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