Australia’s business scribes took one look at news that Seven Group chief executive Peter Gammell, the long-time right-hand man of billionaire chairman Kerry Stokes, is stepping down and asked two questions. Firstly, why is Gammell leaving? Secondly, is his replacement, former resources boss and Seven West chief Don Voelte, an appropriate replacement?
Let’s start with Fairfax’s Elizabeth Knight, who addresses the rumours that Gammell’s departure had something to do with Stokes’ family succession plans.
“Word started to leak out a few weeks ago that Gammell was not happy with Ryan Stokes being given more responsibility within the Seven Group. So it's particularly interesting that Ryan is not being elevated to the top job. The market will assume that he will ultimately take over from Voelte. He was recently moved to chief operating officer, where he is getting an opportunity to work across all areas of the business and with a more hands-on role. Despite being the heir-apparent of the largest shareholder, it would have been unpopular with minority shareholders to have placed Ryan into the top job at this stage.”
Knight passes on the firm denials from Gammell that his resignation has anything to do with Ryan Stokes. We’ll take him at his word.
The Australian Financial Review’s Chanticleer columnist Michael Smith says Gammell actually worked better for Stokes as an “undercover agent”.
“His decision to step down as chief executive of Seven Group Holdings has more to do with his preference for operating strategically behind the scenes, rather than any dramatic spat between members of the Stokes family. There is nothing sinister in the fact that he does not love the limelight that comes with running a public company. Gammell has done that successfully for three years but his real forte is having the luxury to work on secret deals with a powerful private backer.”
Business Spectator’s Stephen Bartholomeusz believes it’s quite appropriate that Stokes lean on Voelte at a time like this.
“In fact it is probably a more obvious fit for Voelte than Seven West, where he will become deputy chairman. Seven Group, apart from its 35 per cent interest in Seven West, owns the WesTrac Caterpillar franchises, 45 per cent or so of Coates Hire (which Seven Group and its private equity partner Carlyle Group are seeking to sell), a big portfolio of investments and the best part of $500 million of cash mainly generated by the sale of its interest in Consolidated Media Holdings to News Corporation last year. Given WesTrac’s exposure to the resources sector, it fits better within Voelte’s range of executive experiences than the television and newspaper industry, where there is as much intuition as conventional management skills required.”
It’s pretty clear that Stokes’ long-term goal is for Ryan to take over. But Voelte is going to be in the hot seat for at least another three years, according to Seven, which gives the heir-apparent plenty of time to learn the ropes so minority shareholders aren’t annoyed when he assumes the mantle.
Meanwhile, Fairfax’s Tim Colebatch has a little piece of political history to begin his piece on the end of the mining boom.
“In mid-1990, when Don Russell was chief of staff to treasurer Paul Keating, he experienced a moment when, as he recalled later, you could almost hear the economy snap – and Australia went into recession. Thursday was the day when anyone listening heard the mining boom snap. The Bureau of Statistics revised away virtually all growth in mining investment for the first half of 2012-13, and reported a 6.2 per cent plunge for the March quarter. That doesn't mean we are necessarily heading for recession. But it does tell us that the resources boom has peaked, sooner than anyone expected. And it lifts the urgency of the quest to stimulate other sources of growth.”
Hearing the economy snap…it’s a nerdy moment, but awesome.
Meanwhile, there are some more Aussie dollar deliberations this morning. The Australian’s economics correspondent Adam Creighton highlights the obvious disadvantages of a lower currency for Australian consumers and businesses.
The Australian's economics editor Alan Mitchell says the fall in the Aussie dollar and the stronger than expected outlook for investment means the Reserve Bank should keep interest rates on hold next week.
And The Australian Financial Review’s Jennifer Hewett emphasises that a lower currency doesn’t increase demand or productivity. We’re thinking Australia’s recently smashed coal industry, specifically.
Elsewhere, The Australian’s Bryan Frith writes that the battle between the independent directors of ASX-listed Miclyn Express Offshore and its two major shareholders serves as a warning to Australian investors about investing in a company that’s locally listed, but internationally based.
“Miclyn is listed on the ASX, headquartered in Singapore, incorporated and registered in Bermuda and subject to Bermudan law. Australia's takeover provisions, which require a bid before a party can acquire more than 20 per cent of a company, and the investor protection measures of the Corporations Act, do not apply.”
And finally, The Australian’s Andrew White heralds the beginning of superannuation fund ownership of Port Botany and Port Kembla. At the same time, White points out that super funds have radically changed their position from opposing state-mandated investments in new toll roads to pleading for infrastructure assets to be made available and state governments can take advantage.