CBD
On television, Mark Bouris passes stern judgment on the business efforts of the famous and slightly well-known as top dog on Nine's Celebrity Apprentice.
Any contestant who fails to measure up inevitably cops the show's catchphrase: "You're fired."
Last week singer Prinnie Stevens got the boot and on Tuesday night another of the show's roster of former reality TV contestants, PR people, washed-up pop stars and former Paris Hilton boy toys will hear the magic words. (Bouris is also a BusinessDay columnist.)
CBD wonders what shareholders in TZ Limited, at which Bouris is chairman and executive director, would like to say to him. TZ's latest quarterly report, filed last week, shows the electronic locker maker has burnt through cash, eating up about $1.1 million in the first three months of 2013.
That left it with about the same amount left in the kitty, plus an available line of credit of $858,000.
"We were burning $350,000 a month - we're down to $100,000 a month. The burn rate is reducing very rapidly," Bouris told CBD. "Generally speaking the brokers and everyone are pretty happy with it - for the first time, I might add." He said a capital raising was possible and revenue was increasing "very rapidly".
"Our biggest shareholder is a big New York hedge fund [QVT] and they've been pretty good to us in extending funds in the past."
According to TZ, it delivers "real world strategies for embedding intelligence into everyday objects".
CBD can't help thinking it would be good if some intelligence was embedded into Celebrity Apprentice. The claim to fame of one contestant, Layla Subritzky, appears to be that she can jam five Tim Tams into her gob at once.
F1 mystery
She was to be the Australian set to reap a multimillion windfall from the float of formula one. But now mystery shrouds the shareholdings of former Australian Grand Prix boss Judith Griggs and other key figures behind the F1 circus.
Formula one is widely said to be headed for a float on the Singapore exchange at a value of about $10 billion, providing an opportunity for its shareholders to cash out. For the past few years, most of Delta Topco, the Jersey-registered company behind F1, has belonged to private equity group CVC, with a 13.8 per cent stake in the hands of formula one's pint-sized tyrant, Bernie Ecclestone.
But a handful of Bernie's loyal consiglieri, including Griggs, have also been rewarded with small stakes. Griggs fended off the protests of anti-race activists as chief executive of the Melbourne Grand Prix in the early '90s after it was poached from Adelaide.
Griggs is now firmly ensconced in the F1 family as an executive at the Swiss company that sells corporate grand prix packages, Allsport Management.
Delta Topco's 2011 annual return shows she owned 0.529 per cent of the company, worth $53 million in a $10 billion float - a far cry from the stake's face value of about $53,000.
Other individual shareholders at that point were WPP boss Martin Sorrell (0.265 per cent), Nestle chairman Peter Brabeck-Letmathe (0.265 per cent), F1 chief financial officer Duncan Llowarch (0.794 per cent), Griggs' Allsport boss Paddy McNally (1.059 per cent) and F1's chief legal officer Sacha Woodward Hill (0.794 per cent). However, come February this year and the lodgment of the 2012 annual return, and all these names had melted away like the fog that sometimes hangs over Jersey.
Some time in 2012, Delta Topco's shareholding structure changed. The individual shareholders disappeared from the register and the company now has four times as many shares on issue, held in the names of a bewildering assortment of funds associated with CVC, JPMorgan, US vulture fund BlackRock, asset managers Waddell & Reed and insurer MassMutual.
Perhaps Griggs and the others now hold their stakes through one of the new shareholders. CBD couldn't raise her by email to ask. However, it's clear Ecclestone retains at least a small slice of F1, held in the name of his Jersey company, Bambino Holdings.
Explorer hits snag
The future looks ugly for Takoradi, the mining explorer run by former Cleo bachelor of the year contender Rodney Hudspeth.
Handsome Hudspeth made the final 50 contenders in the contest back in the '80s (see CBD, February 9, 1989, edited by Glenn Burge, now a Fairfax Media exec).
Back then Cleo panted at Hudspeth's estimated $180 million fortune - about $340 million in today's money - and "palatial ... waterfront mansion".
These days, $180 million would come in handy for Takoradi, which according to its most recent ASX disclosure is down to its last $10,000 - which won't go far, given it estimates its cash outflows are $350,000 a quarter.
The quarterly result, to the end of March, follows a half-year report in early March in which auditor Alex Swansson of BDO qualified the accounts because of concerns that two Namibian subsidiaries might not be able to pay their bills. Swansson also said the loss-making company had yet to pay $2 million due to secured noteholders in October 2011.
Audit trail
Wanted: one auditor to audit an auditor. The Victorian Parliament has opened a tender for an auditor to conduct a performance audit of the state's government-sector auditor, the Auditor-General.
The only organisation CBD knows of that audits auditors on a regular basis is the Xenu-fearing mob over at the Church of Scientology, who insist every member spill details of their traumatic past lives to each other.
According to an ad placed by the chairman of the Parliament's public accounts and estimates committee, Liberal member for beachside millionaires' playground Mornington, David Morris, the purpose of the auditor audit is to "determine if the Auditor-General and VAGO [the auditor's office] are achieving their objectives and in doing so, economically and efficiently and in accordance with the Audit Act and relevant auditing standards".
Let's hope this audit doesn't involve the tin cans the Scientologists are so fond of.
Got a tip?
bbutler@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
TZ Limited, the electronic locker maker chaired by Mark Bouris, reported it burned about $1.1 million in the first three months of 2013 and was left with roughly the same amount in the bank plus an $858,000 credit line. The company has cut its monthly cash burn from about $350,000 to $100,000 and says revenue is increasing rapidly. For everyday investors, that means TZ is still cash‑constrained but showing signs of improving cash management and sales growth — factors that could affect share value and the need for further funding.
Mark Bouris said a capital raising is possible. Given TZ's limited cash balance, available credit and reduced but ongoing burn rate, a capital raising could be used to shore up the balance sheet or fund growth. For shareholders, a raise could dilute existing holdings but also reduce the risk of insolvency if it secures sufficient funding; brokers reportedly appear broadly positive about recent progress.
'Burn rate' is the rate at which a company uses up its cash reserves to cover operating expenses. TZ said it was burning about $350,000 a month but has reduced that to around $100,000 a month. A lower burn rate improves the company's runway and reduces the immediate urgency for new funding, though the company still needs to sustain revenue growth to become cash‑positive.
TZ's biggest shareholder is a New York hedge fund identified as QVT, which has previously extended funds to the company. Having an institutional backer willing to provide financing can be a material support for a small, cash‑hungry company — it can help management avoid distress and potentially smooth any future capital raisings.
Formula One was widely reported to be heading for a proposed float on the Singapore exchange at about a $10 billion valuation. Delta Topco's 2011 annual return showed a number of individuals with small stakes (for example Judith Griggs held about 0.529%), but by the 2012 return those individual names had disappeared. The company increased its shares on issue and the register now lists funds associated with CVC, JPMorgan, BlackRock, Waddell & Reed and MassMutual, making the ownership structure less transparent.
The article reports that sometime in 2012 Delta Topco changed its shareholding structure: individual shareholders disappeared from the register and the company had four times as many shares held in the names of various institutional funds. It suggests those individuals may now hold economic exposure through those funds, but the exact arrangements were unclear from the public filings.
Takoradi was reported to be in a precarious position: it had about $10,000 in cash and estimated cash outflows of roughly $350,000 a quarter. Earlier, auditor Alex Swansson of BDO qualified the accounts amid concerns two Namibian subsidiaries might not be able to pay their bills, and the company had not paid $2 million due to secured noteholders in October 2011. Those facts point to a high risk of insolvency or the need for urgent recapitalisation.
The Victorian Parliament placed a tender to appoint an auditor to conduct a performance audit of the state's government‑sector auditor, the Auditor‑General (VAGO). The stated purpose is to determine whether the Auditor‑General and VAGO are achieving their objectives economically and efficiently and in accordance with the Audit Act and relevant auditing standards. The move was advertised by David Morris, chair of the Parliament's public accounts and estimates committee.
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