The former Takeovers Panel member Trevor Rowe has found himself in the middle of his first shareholder kerfuffle since the melodramatic listing in 2008 of BrisConnections, the toll-road company he chairs.
Investors in the Rowe-chaired unlisted public company Careers Australia, which pulled its plans to list on the ASX last year, are questioning the tactics being used by the company's largest shareholder in order to lift its stake.
In a matter taken to the Takeovers Panel last week, shareholders have sought to block the private equity group White Cloud Capital pushing ahead with its unorthodox 66? a share offer, which is conditional on the company's shareholders being lowered from 80 to less than 50.
"The applicants submit, among other things, that White Cloud/Cirrus have intentionally undertaken a strategy of reducing the number of Careers Australia shareholders to below 50 for the purposes of avoiding the requirements of Chapter 6 of the Corporations Act 2001," a statement from the panel said.
There have also been claims that White Cloud, which now has a 45.3 per cent stake after converting some notes last year, has only selectively announced its offer to smaller shareholders.
It has been left up to shareholders to take the matter to the panel, with the deal appearing to have the blessings of the Rowe-chaired Career Australia board.
White Cloud's nominees on the Career Australia board include the former Allco Finance Group director who chaired the Airline Partners Australia private equity consortium and its failed $11.1 billion bid for Qantas, Bob Mansfield.
FROSTED OVER
Meanwhile, one of the aircraft leasing whiz-kids behind the failed APA bid for Qantas, the 38-year-old ex-Macquarie and Allco banker Greg Woolley, has also hit some turbulence of his own.
Shareholders in the Real Estate Capital Partners USA Property Trust are up in arms over the trust's plans to make Woolley's private company Frost Holdings the sole underwriter of the group's heavily-discounted 0.98 for 1 ($20 million) renounceable rights issue. This could potentially see Woolley, who also once managed the investments of Melbourne's billionaire Liberman family, lift his stake from 19.8 per cent to 59 per cent.
Yesterday, the responsible entity of the fund, The Trust Company, was handed a rival proposal from the advisors Moelis that would allow the other substantial shareholders (including the Intelligent Investor, Regal Funds Management and Acorn Capital) to also participate as underwriters.
The offer is priced at 40? a share, a 61 per cent discount to the former Mariner managed fund's net tangible asset backing after the raising.
"Our proposal is that we put an alternative underwriting proposal forward whereas no shareholder will go above 20 per cent of the trust and that no one will gain control by stealth," the chief investment officer at the Intelligent Investor, Steve Johnson, said.
The responsible entity was sticking to its guns late yesterday. The Trust Company issued a notice saying it would press on with its plans. Last night, it is believed the matter was taken to the Takeovers Panel.
RED ALERT
The former Australian Securities and Investments Commission chairman Tony D'Aloisio (aka Mr D) was toasted yesterday for his winemaking skills when he was appointed the next president of the Winemakers' Federation of Australia.
Mr D, who bought his Oakridge winery in the Yarra Valley just months after he become ASIC chairman in December 2007, said in a statement he was "looking forward with the [federation] board and CEO to deal with the key challenges which confront winemakers and this industry, an industry which is so important for Australia for jobs and export earnings".
The details of Mr D and his wife Ilana Atlas's purchase of the Oakridge winery from the failed wine company Evans & Tate were never publicly disclosed.
This is because, without any involvement by Mr D, ASIC granted a special exemption to financial reporting requested by Ferrier Hodgson, which at the time was Evans & Tate's administrator.
That exemption was granted just 39 days after administrators were appointed on August 21, 2007, and less than three months before the Oakridge winery was sold to Mr D.
Got a tip? srochfort@fairfax.com.au
Frequently Asked Questions about this Article…
What is the Careers Australia shareholder dispute about and why should everyday investors care?
The dispute centres on a conditional takeover-style offer by private equity group White Cloud Capital for unlisted Careers Australia. Shareholders have taken the matter to the Takeovers Panel, alleging White Cloud has tried to reduce the number of shareholders to below 50 (from about 80) to avoid Chapter 6 takeover rules in the Corporations Act. Everyday investors should care because the case raises issues about fair treatment, selective communications to smaller holders and how control can shift in unlisted public companies.
Who are the main parties involved in the Careers Australia takeover controversy?
Key parties named in the article are White Cloud Capital (the private equity group increasing its stake to about 45.3% after converting notes), the Career Australia board chaired by Trevor Rowe (a former Takeovers Panel member), and White Cloud nominees on the board including Bob Mansfield. Shareholders opposing the approach have taken action through the Takeovers Panel.
What role does the Takeovers Panel play in these types of shareholder disputes?
The Takeovers Panel is the forum shareholders in the article used to challenge White Cloud’s actions. The panel can investigate and make orders about takeover conduct where parties allege tactics to avoid takeover law requirements or unfair treatment of shareholders. In this case, applicants asked the panel to block a conditional offer and examine whether shareholder numbers were being reduced to skirt Chapter 6 obligations.
Why are shareholders concerned about reducing the number of shareholders below 50?
Shareholders allege White Cloud/Cirrus has purposefully reduced the number of Careers Australia shareholders to fewer than 50. According to the article, that would allow the company to avoid the requirements of Chapter 6 of the Corporations Act 2001, which govern takeover processes and protections. If true, it could limit regulatory safeguards designed to protect minority investors in control contests.
What specific complaints have smaller shareholders raised about White Cloud’s approach?
Smaller shareholders complained that White Cloud has selectively announced its conditional offer to some holders and not others, making it harder for all shareholders to assess and respond. They also challenge the conditional nature of the offer and the alleged strategy to reduce shareholder numbers to avoid takeover rules.
What’s happening with Real Estate Capital Partners USA Property Trust and Greg Woolley?
Shareholders in the Real Estate Capital Partners USA Property Trust objected to a heavily discounted renounceable rights issue (0.98 for 1) that Frost Holdings (owned by Greg Woolley) would underwrite solely. That underwriting could lift Woolley’s stake from about 19.8% to roughly 59%. Other substantial investors proposed a rival underwriting plan via advisers Moelis to allow multiple underwriters and limit any single investor to no more than about 20%.
How could the RECP rights issue and Frost Holdings underwriting affect fund governance and investor control?
If a single party underwrites and takes up large entitlements, it can meaningfully increase its stake and potentially gain control by stealth, which concerned other investors quoted in the article. The rival proposal put forward would spread underwriting among several substantial shareholders and cap individual holdings to prevent a single party from gaining outsized influence after the raise.
What should investors watch next in these takeover and rights-issue disputes?
According to the article, investors should watch announcements and rulings from the Takeovers Panel, statements from the companies’ responsible entities (for example, The Trust Company in the RECP matter), any formal offers or notices to shareholders, and whether rival underwriting proposals are accepted. These developments will determine how control issues and shareholder protections are resolved.
Call 1300 880 160
Start a chat
Schedule a call
