Elders hands out coffee with spin

It's a public relations nightmare: selling the market a story that a chief executive leaving "immediately" is all about expediency and mutual interest.
By · 28 Nov 2013
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28 Nov 2013
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It's a public relations nightmare: selling the market a story that a chief executive leaving "immediately" is all about expediency and mutual interest.

When long-troubled rural services business Elders announced its boss Malcolm Jackman was packing the cartons with family snaps, the disagreement with the board must have been a doozy.

The impasse between the board (and its recently installed chairman, Mark Allison) and Jackman was just a matter of timing.

Allison believed Wednesday looked good enough, where Jackman had a timetable of staying until the first quarter of next year.

Ultimately Jackman at least got to have a coffee with the external spin meister, and much was made of the fact that the chairman and chief executive travelled from Sydney to Adelaide on the same flight.

It was a desperate attempt at a bit of cosmetics covering. The bottom line is that Jackman had been hanging on to the top job by a thread and the tenacity for which he is famous managed to keep him in the game for longer than most expected.

Elders has been caught in a pincer vice for at least five years - one that it has been trying to wriggle its way out of through a series of restructuring and asset sales. This is not Jackman's fault - he was brought in to fix the mess.

It is the age-old story of previous regimes overpaying for assets while accumulating a conglomerate using too much debt. The trouble is that during Jackman's tenure the quagmire got deeper.

The various businesses that were put up for sale as part of the corporate restructuring were not performing, and thus their value diminished with time.

The automotive business (now sold) and the forestry operations (which Elders has expensively wound down) were just the core components to a series of disasters that contributed to losses of almost $1.6 billion over five years.

By 2012 the company had basically instituted do-it-yourself receivership - the kind you have when the banks are in charge but don't have to formally take that step because the money men have already placed teams to oversee their interests and the company's management is co-operating.

The biggest benefit for the bank syndicate was that it got to continue to milk fees and generous interest.

But it is the mishaps along the way that have brought into question the management's capacity to deal with the day-to-day operations. This was not Jackman's area of expertise. He is not the operations guy - not there to build new businesses. He was installed to sell the old (dud) ones.

Had the board managed to offload Elders Rural Services this year to the one bidder that seemed to turn up at the negotiating table, then Jackman's departure might have been handled a bit differently - a fancier send-off than box packing and turning in the security tag.

The board and more particularly the banks didn't form a view that the knock-down price was reflective of value. Hindsight might suggest otherwise.

Instead Elders is now announcing the search for a successor, a move that should have already been in place for the past six months.

The most likely contender will be internal favourite David Goodfellow, so that may explain any previous attempt to cast a wider net.

The final nail in Jackman's coffin appears to be accounting irregularities in the value of live cattle, and the defection of Elders' live cattle trading team to rival Ruralco.

Elders has taken court action to stop the traders poaching clients and require them to return confidential information.

As for Jackman, he has already moved back to Sydney and is working on other ventures, including chairing a mining services hopeful, Subzero Mining.
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