Investor funfest in TSV's pass the parcel

Investors might not get much joy from the share price at TSV Holdings but they can have an awful lot of fun trying to work out who is on the board and in control of the company on any given day. Yesterday, for example, TSV lost an entire board, management team and major shareholder in the space of two hours.

Investors might not get much joy from the share price at TSV Holdings but they can have an awful lot of fun trying to work out who is on the board and in control of the company on any given day. Yesterday, for example, TSV lost an entire board, management team and major shareholder in the space of two hours.

Shareholders ought not be too concerned, though, because TSV has stuck to its environmentally sound practice of recycling directors and major investors through its boardroom. New chairman, Robert Grey, only left the board in March this year. Grey founded and ran TSV's underlying business, Austco, which specialises in communications devices for the health industry. TSV bought his business in 2007 and he became managing director.

Last year, TSV reappointed as chairman David Carter, who headed the board when the company first listed on the ASX. Carter left TSV's board in late July this year, replaced by the seriously wealthy Brian Blythe - who many would remember as the one-time driving force behind catering, dry cleaning and plastic clothes-hanger company Spotless.

Blythe's family company Silchester Investments may, however, have set a new record for the shortest period of time for which a "cornerstone investor" has hung around after flogging their entire stake on Monday.

He, and his son, James, only arrived on the scene at the end of April, taking a placement of 14.11 million shares at 4? each as the first leg of a capital raising to try to put TSV back on a firmer financial footing. The placement was followed in May by a 1-for-6 equity raising, also at 4? a share, bravely underwritten by Lodge Corporate.

It was a monumental disaster. Of the 18 million shares on offer, only 3.72 million were taken up by investors - and 2.35 million of those were the Blythe family's entitlement. That means 93 per cent of the stock was knocked back.

The Blythes took the lion's share of the shortfall, giving them 22.8 million shares - the second-largest holding behind Bob Grey and his family - and what would seem to be an undemocratic two board seats out of four.

Insider hears that the Blythes had one idea of how to run the company, while others at TSV had a different plan. Insider understands they came in with their eyes open about the problems at the Tecsound arm of TSV, which had been draining the profitable Austco operation and was put into administration in June.

It came to a head this week when the Blythes sold their stock through UBS Securities at 3.75? - a price which would have been, at best, break-even on their investment.

Just after the market opened yesterday morning the Blythes's resignations were announced and barely 90 minutes later Grey, Austco executive Alex Talevski and significant shareholders Bill Brookes and Michael Howard came on board. The company also cut its overheads by accepting the resignations of chief executive Geoff Wanless and chief financial officer Jason D'Arcy, although the latter remains as company secretary. Expect another announcement this morning revealing which of the new directors bought the Blythes's shares.


Interesting to see Insurance Australia Group (IAG) head off to the annex, New Zealand, to test the appetite for an issue of corporate bonds to retail investors. IAG is planning to raise as much as $NZ150 million ($114.96 million) of unsecured subordinated bonds across the Tasman when its offer goes out next month.

The money is for the usual non-specific "general corporate purposes" and to give the insurer extra flexibility in managing its future refinancing requirements - such as the looming conversion of its reset preference shares in June next year.

Unlike the strangely quiet local market for such issues, and in spite of stated federal government desire, the New Zealand Stock Exchange's specialist bond market has about $NZ15 billion of securities.

That suggests IAG is doing a comparatively small raising as a "taste test", giving it options down the track. One consequence of the global financial crisis was banks regained the whip-hand as prime financiers to corporates like IAG because other forms of capital raisings dried up in an environment where risk was a dirty word. IAG's move continues the trend of Australian corporates going offshore to issue bonds in more sophisticated markets.

It also underlines that Australia is still a long way from fulfilling one of the key recommendations from the landmark 2009 (Mark) Johnson report into making Australia a financial centre - to develop a listed, retail corporate bond market.

With the huge flow of (compulsory) cash through the doors of superannuation funds, though, there would seem to be no shortage of potential investment appetite - particularly as a recent Organisation for Economic Co-operation and Development (OECD) study found Australian funds direct on average 11 per cent to fixed interest investments and more than 50 per cent to equities, which is almost the opposite of the OECD average of 50 per cent of money going to fixed interest.


IAG is not the only financial services group trying to tap investor appetite for low-risk, certain income investments. While most of the major banks might have peeled back for their aggressive pursuit of retail deposits with attractive interest rates, one financial institution surprised itself recently.

It put up a six-month term deposit, offering perhaps as much as 8 per cent fully franked, to its moneyed client base as a way of providing a more certain income stream amid whip-sawing financial markets. Insider hears that instead of pulling in the $100 million hoped for, it had applications for three times as much which just goes to show that the "haves" are just as leery as the "wish we hads" of punting their money in these conditions.

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