CBD
Legendary adman Siimon "The Grim Reaper" Reynolds is to make his triumphant return as a director of an ASX-listed company when, if all goes to plan, telco Inabox Group lists at the end of the month.
The Photon Group founder has signed on as chairman of Inabox, which wholesales telco services to boutique operators, in return for a modest stipend of $100,000 a year.
That's great value at just an eighth of Inabox's 2012 profit of $800,000. By way of comparison, the chairman of the $47 billion Australian Super fund, currently Heather Ridout, gets about $161,000.
Reynolds' tidy package also indicates Telstra chairman Catherine Livingstone is terribly underpaid. His pay is about 0.22 per cent of Inabox's $45.7 million revenue for 2012, and applying the same ratio to Telstra's mammoth takings indicates Livingstone should be on $50 million a year. She gets a miserly $684,000.
Let's hope Inabox does better than Photon, which in 2010 nearly tumbled like one of the people slain by the reaper in Reynolds' famous '80s AIDS ad - except in Photon's case it was escaping not a bowling ball but $450 million in debt. Of course, by then, Reynolds had been out of the company for three years, having moved on to a second career as a self-help guru.
Back to Inabox, which is trying to sell 17 per cent of the company to punters for $2.9 million, valuing it at $16.2 million.
According to the prospectus, profit for the first half of the 2013 financial year was a bumper $1 million - but the company warned that because of "seasonality and other factors, including an increase in staff numbers", the second half "is unlikely to produce the same level of profitability".
And as of December 31, liabilities outweighed assets by $2.5 million.
If punters put up $2.9 million that would fill the hole nicely. Except, of course, for the entirely reasonable $700,000 - a quarter of the money - in fund-raising costs that is to be paid to sponsoring broker Shaw Stockbroking, investigating accountants Ernst & Young and others.
PS: CBD consiidered doubliing every "i' iin this iitem but as thiis paragraph iindicates thiis iis extremely iiriitatiing.
Goldies rush in
Rolling Stone may have described Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money", but problems at developer Becton indicate it might after all be made up of fallible humans.
Goldies spent $100 million buying Becton's debt and has so far recovered about $40 million in interest repayments. Becton went into receivership in February and is now looking to realise the company's remaining assets - six retirement villages and two developments in Sydney, a partly built housing project in Waterloo and a social housing PPP in Bonnyrigg.
However, the company is in breach of its obligations at Bonnyrigg and it looks like the project has a Becton-free future.
That leaves the retirement villages - difficult to sell at the best of times, which this isn't - and the Waterloo project, which Goldies will have to build out before it can get a sale away.
GS can apparently just build the first half of the project, which will take about a year.
CBD is unsure how much Becton's assets are worth, but to get any value the vampire squid is going to be sticking around - and spending money - for a while.
CEO rocking on
Former Jetstar boss Bruce Buchanan has been in touch to clarify that he was never the CEO of potions outfit Vanessa Megan, as CBD reported on Tuesday. He was only ever an adviser.
CBD was confused by a post on Vanessa Megan's Facebook page in May last year welcoming Buchanan as "one of the youngest and most revered CEOs in Australia today".
It was Buchanan's wife, Liz, who was to be CEO, but she stepped down at the end of last year for personal reasons and the couple sold their half of the company back to its founder, actor Vanessa Gray. "We sold the shares back to Vanessa on very amicable terms," Buchanan told CBD. "I'm still helping Vanessa out wherever I can. I still love the product."
As for Rocklive, the digital marketing outfit where Buchanan is boss, he reckons business has increased sixfold since he took charge in November. "In July we'll start our New Zealand and Singapore businesses, which we've been gearing up for."
A push into the US is to follow at the end of the year.
Coppo the tip
Nightowls would have been watching the Dow Jones index late on Tuesday to see if the head of Goldman Sachs' insto dealing desk, Richard Coppleson's prediction of a US stock rally comes true.
On Monday, Coppo used his famously multi-coloured afternoon markets report to point out that the Dow "has rallied for the last 18 Tuesdays in a row". The stat may tang of the irrelevant figures TV sports commentators pluck from their screens during a lull in play, but CBD is afraid to argue given Coppleson correctly predicted a Dow rebound on Monday night following a shocker on Friday.
Having a go
Also putting their reps on the line on Tuesday were Australia's market economists, who dutifully stumped up estimates of what Glenn Stevens and the Reserve Bank crew would do to official interest rates at lunchtime.
Last month just eight of 29 tea-leaf readers surveyed by Bloomberg correctly picked a rate cut from the slurry, but this time only Macquarie Research got it wrong by plumping for a cut. The remaining 25 live to fight another month after picking no change.
Got a tip?
bbutler@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Inabox Group is a telco wholesaler that supplies services to boutique operators. According to the article, Inabox was preparing to list on the ASX at the end of the month (if all goes to plan).
Siimon Reynolds, the founder of Photon Group and a well‑known adman, has signed on as chairman of Inabox. The article says he will receive a stipend of $100,000 a year for the role.
The prospectus noted Inabox had $45.7 million in revenue for 2012 and a 2012 profit of about $800,000. It was selling 17% of the company for $2.9 million, valuing the business at $16.2 million. The prospectus also reported a $1 million profit for the first half of FY2013 but warned the second half was unlikely to match that level of profitability.
The article states that as of December 31 liabilities outweighed assets by $2.5 million. It also notes the planned $2.9 million raise would largely plug that shortfall but that about $700,000 (roughly a quarter of the raise) was budgeted for fundraising costs to brokers and advisers. These facts from the prospectus are important considerations for everyday investors weighing the IPO.
The piece recalls that Photon nearly collapsed in 2010, facing about $450 million in debt; Reynolds had left Photon three years earlier and by then had moved into a different career. That history is mentioned as context when assessing Reynolds’ new role at Inabox.
Becton went into receivership. The article says 'Goldies' (who bought Becton’s debt for $100 million) has recovered roughly $40 million in interest repayments and is now trying to realise remaining assets: six retirement villages, two Sydney developments, a partly built Waterloo housing project and a social housing PPP in Bonnyrigg. Becton is in breach at Bonnyrigg, which likely removes that project from Becton’s future, and Goldies may have to spend and remain involved for a while to extract value.
Bruce Buchanan clarified he was never CEO of Vanessa Megan; he was an adviser. The article explains his wife Liz had been slated to be CEO but stepped down and the Buchanans sold their half of the company back to founder Vanessa Gray on amicable terms. Buchanan also said he continues to help where he can and that his digital marketing business Rocklive has grown significantly and is expanding into New Zealand, Singapore and later the US.
The article highlights two pieces of market colour: Richard Coppleson of Goldman Sachs had predicted a US stock rally and noted the Dow had reportedly rallied for 18 consecutive Tuesdays. Separately, a Bloomberg survey of Australian market economists showed most expected no change to official interest rates at the Reserve Bank announcement; only Macquarie Research had forecast a cut in that round, while the remainder picked no change.
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