CBD
Say it ain't so, Joe.
Mining veteran Joe Gutnick is in danger of losing his "Diamond Joe" nickname after all but selling out of a company that hopes to mine shiny rocks in the Northern Territory.
Gutnick's US vehicle, Legend International Holdings, used to own more than 50 per cent of ASX-listed Merlin Diamonds but last month sold all but a handful of shares. The transactions reaped Legend $12.74 million but it's not clear to CBD whether that represents a profit or a loss.
Peter Lee, who wears Legend and Merlin hats as secretary of both companies, didn't seem to know either.
"I haven't done the calculation," he said. Lee also declined to say why Legend didn't sell into a takeover bid being mounted by Singapore's Innopac Holdings, an investment company that started life as Colonel Sanders Kentucky Fried Chicken Pte Ltd in 1973.
This is something of a puzzle, because, on the back of CBD's envelope, the deal being offered by Innopac appears much more lucrative than selling on the open market. Innopac earned the endorsement of the Merlin board - including executive chairman Gutnick - by offering 1.67 of its shares for every Merlin share.
At the end of January, when the offer was made, this represented a premium of about 35 per cent. With Merlin shares falling since then, it now looks even better.
Lee said Legend's share sale and the takeover bid were "two totally separate transactions".
The bid closes on June 28 and so far Innopac has mopped up 6.9 per cent of Merlin.
Meanwhile, Merlin is about to issue 8 million convertible notes to a mysterious company in tax haven the British Virgin Islands.
The money is to be used to develop Merlin's diamond field.
CBD asked if Lee could say who was behind the BVI company, ISR Investments. "No, because I don't know them," he said.
Shareholders will be asked to approve the note issue at a meeting in Melbourne on May 24.
A fairly high rate
Red faces at community finance group Foresters, which has been pinged by the corporate watchdog for springing mammoth interest rates on its struggling customers.
According to the Australian Securities and Investments Commission, Queensland-based Foresters, which trades as Fair Finance Australia, was charging an annual interest rate on some loans of 35 per cent.
The Fair Finance website is full of talk about "helping individuals and families to overcome financial exclusion" but that's the kind of return that would make Gold Coast loan shark turned Pattaya pimp Tim "Sharky" Ward happy.
ASIC didn't ping Fair Finance for the interest rate itself but rather for telling customers in October that the rate was a slightly more reasonable 19.95 per cent.
Fair Finance said this was due to "compliance failure". It fixed the website after being contacted by ASIC "within a matter of hours", CEO Belinda Drew told CBD.
"This is where we've ended up and we've used it as an opportunity to improve the quality of what we're doing," she said. She said the rate was charged to consumers who would normally be in the pay-day lending market, where rates are "much, much higher than that".
Choose your path
CBD loves US congressman Paul Ryan as much as the next Republican, but nonetheless isn't quite sure what relevance his 2013 budget plan has to Australians.
Ryan's plan for the US budget was called The Path to Prosperity - a title very similar to the Path to Prosperity series running in The Australian "in association with GE". While Ryan's plan promised spending and tax cuts, the Australian version is a little fuzzier.
The front page of Tuesday's Oz featured a report on the rise of the "industrial internet" - a topic, coincidentally, covered in "sponsored content" downloadable from the paper's website.
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Frequently Asked Questions about this Article…
According to the article, Legend International Holdings — Joe Gutnick’s US vehicle — sold all but a handful of its Merlin Diamonds shares last month and received about $12.74 million from the transactions. The article notes it isn’t clear whether that amount represented a profit or a loss, and Merlin/Legend secretary Peter Lee said he hadn’t done the calculation.
The article describes the sale as puzzling because Singapore’s Innopac Holdings had made a takeover offer for Merlin that looked relatively lucrative: the bid offered 1.67 Innopac shares for every Merlin share (about a 35% premium at the end of January). Despite that premium and the board’s recommendation, Legend sold on the open market. Peter Lee told CBD the share sale and the takeover bid were 'two totally separate transactions.'
Innopac’s offer, endorsed by the Merlin board including executive chairman Joe Gutnick, was 1.67 Innopac shares for each Merlin share — which represented about a 35% premium when announced at the end of January. The article also notes Innopac had acquired about 6.9% of Merlin so far and that the bid closes on June 28.
Merlin intends to issue 8 million convertible notes to ISR Investments, a company based in the British Virgin Islands, with the funds earmarked to develop Merlin’s diamond field. The article reports the identity behind ISR is unknown to Merlin’s secretary and that shareholders will be asked to approve the note issue at a meeting in Melbourne on May 24.
The article states Innopac had 'mopped up' about 6.9% of Merlin at the time of reporting.
The Australian Securities and Investments Commission flagged that Foresters, trading as Fair Finance Australia, had been charging some loans an annual interest rate of 35%. ASIC’s issue related to the company’s website telling customers the rate was 19.95% in October. Fair Finance said this discrepancy was due to a 'compliance failure' and fixed the website within hours, with CEO Belinda Drew noting the loans were aimed at customers who would otherwise use higher-rate payday lending.
The article highlights that Merlin planned to issue convertible notes to ISR Investments in the British Virgin Islands while the identity of ISR wasn’t known to company officials. For everyday investors, such transactions can raise transparency questions — the article simply reports the lack of clarity and that shareholders are being asked to approve the issue at a meeting.
The article mentions US congressman Paul Ryan’s 2013 budget plan titled 'The Path to Prosperity' and questions its relevance to Australians. It also notes a similarly named 'Path to Prosperity' series running in The Australian newspaper (in association with GE), and briefly references a front-page story on the 'industrial internet' as sponsored content — raising questions about the overlap between sponsored material and editorial coverage.
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