Gloves off in battle for Becton
Failure to strike a deal with Goldman Sachs - which last week bought the $200 million debt owed by Becton to Bank of Scotland International for just $100 million - could also see the future of the state government's $1.2 billion Bonnyrigg social housing project thrown into doubt.
Becton is the builder of the Bonnyrigg project, where an 81-hectare government-owned housing estate is being turned into 2433 dwellings.
Should Becton be put into into receivership by Goldman Sachs, the construction company could be forced out of the Newleaf Communities partnership with Westpac, the property maintenance firm Spotless Group and St George Community Housing.
Newleaf holds the rights to build and run Bonnyrigg until 2037.
"If Becton and Goldman Sachs can work together, Becton can once again be a powerful player in property," Mr Olney-Fraser said.
"If Goldman Sachs uses this deal with [Bank of Scotland] to put Becton into receivership, the project at Bonnyrigg will be adversely affected. This would have a big impact on the many families which Becton is helping in partnership with the NSW government."
Becton - once a giant of the Australian construction industry with a market capitalisation in excess of $4 billion - now has just $300 million of assets on its books, $300 million of debt, and a market value of $3.4 million.
The remaining assets include more than 1000 units in retirement villages in Melbourne and Sydney, valued at an estimated $150 million, as well as housing projects at Bonnyrigg and Waterloo in Sydney and Kensington in Melbourne.
"History shows that if a retirement village falls into receivership, there is a major impact on unit values," Mr Olney-Fraser said.
"No potential buyer wants the uncertainly of buying into a village that is controlled by a receiver, or has recently been in receivership."
Mr Olney-Fraser's company, Mariner, is the largest shareholder in Becton, with 18 per cent of the company's shares. Mariner will on Monday seek shareholder approval to exercise options that will take its stake in Becton to 30 per cent. Mr Olney-Fraser will also make a second attempt to join the board.
In November Mariner's chairman, Donald Christie, joined the board of Becton, but Bank of Scotland objected to Mr Olney-Fraser taking a second seat, stating that Mariner could exert too much control of the company.
"Mariner wants two directors on the Becton board, and we won't stop until we get them on," Mr Olney-Fraser said.
"We will convert our options to shares, taking Mariner's shareholding in Becton to about 30 per cent, making it the largest shareholder of Becton."
As the battle for control of the company heats up, Mr Olney-Fraser has taken a swipe at the pay packet of Becton's chief executive, Matthew Chun, pointing out that his $1 million annual remuneration is almost one-third of the company's entire value.
"It's time for Matthew Chun to deliver something out of the [Bank of Scotland] debt sale for shareholders. He has done a great job keeping Becton alive post-GFC, but shareholders have been smashed along the way. "
Mr Chun said he was unable to comment on Mr Olney-Fraser's remarks as Becton was in the midst of a trading halt and due to make a statement to the ASX on Monday.
Frequently Asked Questions about this Article…
Goldman Sachs recently bought the $200 million debt that Becton owed to Bank of Scotland International for about $100 million. That purchase gives Goldman more control over Becton's debt situation and, if no compromise is reached, could lead to actions such as placing Becton into receivership.
According to Darren Olney-Fraser, history shows that when a retirement village or housing project falls into receivership it creates buyer uncertainty and can materially reduce unit values. Potential buyers often avoid properties controlled by a receiver, which can push down prices for apartments and retirement units owned by Becton.
Becton is the builder for the NSW government's Bonnyrigg project, a $1.2 billion redevelopment of an 81-hectare estate into 2,433 dwellings. If Becton cannot reach a deal with Goldman Sachs or is put into receivership, the future delivery of Bonnyrigg could be thrown into doubt and Becton could be forced out of the consortium managing the project.
Newleaf Communities—partnering with Westpac, Spotless Group and St George Community Housing—holds the rights to build and run Bonnyrigg until 2037. If Goldman places Becton into receivership, Becton could be forced out of that Newleaf partnership, potentially disrupting the project and its delivery partners.
Once valued at more than $4 billion, the article says Becton now has roughly $300 million of assets, about $300 million of debt, and a market value around $3.4 million. Remaining assets include more than 1,000 retirement village units (estimated at $150 million) and housing projects in Bonnyrigg, Waterloo and Kensington.
Mariner, controlled by Darren Olney-Fraser, is currently Becton's largest shareholder with an 18% stake. Mariner plans to seek shareholder approval to exercise options that would increase its holding to about 30%, and Olney-Fraser is attempting to gain an additional board seat to influence company direction.
Olney-Fraser has publicly criticised Becton's CEO Matthew Chun for his $1 million annual remuneration, noting that amount is a significant proportion of the company's current market value. He has urged management to deliver tangible results from the recent debt sale for the benefit of shareholders.
Investors should watch for any ASX announcements (the company was under a trading halt and due to make a statement), updates on talks between Becton and Goldman Sachs, the outcome of Mariner's proposed option conversion and board moves, and any signs of receivership. Those events could materially affect Becton's projects, retirement village unit values and shareholder outcomes.
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