THE DISTILLERY: Packer limits

Jotters speculate on James Packer's request to restrict his stake in Echo Entertainment, while one digs into the revealing former statements of Bob Diamond.

The amount of time that it took Perpetual to secure permission to increase its stake in Echo Entertainment puts the latest comments from billionaire James Packer into perspective. Australia’s business commentators have broadly concluded that Packer is trying to encourage regulators to give him a quicker green light by playing down the chances of a full takeover bid.

Fairfax’s Malcolm Maiden introduces the idea that Packer’s move makes a lot more sense when you consider how long it's taken Perpetual to achieve the same end.

"One of Echo's funds management shareholders, Perpetual, applied last November to boost its shareholding in Echo from 8 per cent to as much as 15 per cent, and only this week got the go-ahead. It sold into the takeover speculation and halved its stake to 4 per cent this year, but the time it took to process the request is instructive. Perpetual is an investment company. Its application was uncomplicated and it still took seven months to process. Crown and Genting are casino groups with all the attendant probity issues, and while they do not compete in the same geographic markets, they and Echo are all chasing Asian high-roller gamblers. Given that, Crown and Genting are facing waits as least as long as Perpetual's and probably longer. Crown would get an answer around September on the Perpetual timetable. Genting arrived later, and on the Perpetual precedent would wait until January.”

Business Spectator’s Stephen Bartholomeusz says the element of speed is made all the more important by the increasing presence of Singapore’s Genting.

"With Singaporean gaming giant Genting also on the Echo register, with just under 10 per cent, and also having applied for approval to go beyond the 10 per cent limit and its ultimate ambitions not clear, Packer may have felt it would be tactically important to speed up Crown’s approval process. By making it clear that he wasn’t seeking control at this stage – and giving the regulators reassurance that Crown would have to submit a new application and undergo a new and different type of investigation if his own ambitions changed – he has probably made it somewhat easier for the regulators to assess the current application and therefore to process it more quickly than might otherwise have been the case. Crown couldn’t, of course, go straight to 25 per cent even if it obtains the necessary approvals, given the 20 per cent takeover threshold. The initial ceiling on his potential shareholding, however, does tend to support the thesis that he isn’t at this point after control of Echo but meaningful influence and a material economic exposure to that business.”

And The Australian Financial Review’s Chanticleer columnist Michael Smith says the move indicates just what role Genting appears to be playing in Packer’s plan.

"James Packer’s request to limit his stake in Echo Entertainment to 25 per cent has been triggered by the arrival in Australia this week of representatives from Asian gaming group Genting. The billionaire is now in danger of losing his first mover advantage as Crown and Genting compete neck and neck for control of Echo. Agreeing to impose a 25 per cent limit on the amount of stock he can buy in Echo looks like a move to butter up the NSW Independent Liquor and Gaming Authority, rather than a significant strategic move. It also signals Packer’s Crown and Genting are more likely to compete for Echo than work together.”

Elsewhere, The Australian’s John Durie takes a look at the embarrassing document that departed Barclays chief executive Bob Diamond delivered to British parliamentary hearings.

"In doing so, someone from outside the club has rocked the banking and regulatory elite in a city famed for looking after itself and its own. Suffice it to say the last thing British banks need now is another inquiry, but the obvious lack of ethical standards evident in the system make you wonder what will force change. In one of just three formal file notes he had written in his career, Diamond wrote in October 2008 that Barclays had been encouraged by Whitehall or the Bank of England to drop its suggested rates submitted to the British Bankers Association. The association used the bank rates to set the Libor, the benchmark for $US800 trillion in borrowings and derivatives. The class-action lawyers could have a field day.”

In other international matters, The Australian’s Rowan Callick reminds Australian readers how important Japan is to our national prosperity and how its political system should be of greater interest to us.

Meanwhile, The Australian Financial Review’s Jennifer Hewett looks at the ongoing consequences of former Prime Minister Kevin Rudd’s lecture in mainland China about the country’s human rights record.

In local affairs, Fairfax’s Michael Pascoe writes about how the slump in coal prices has made Queensland’s Galilee Basin, which is a long way off from the coast and deep underground, has hurt the economics of many proposed sites. While we’re on commodities, The Australian’s Robin Bromby looks at the increasingly bearish tones emanating from the metals markets.

In company news, Fairfax’s Insider columnist Ian McIlwraith says the collapse at Provident Capital could have been a lot worse.

And finally, The Australian’s Tim Boreham looks at some of the beneficiaries from the carbon tax. The most obvious are accountants, who will complain loudly about the extra labour burden and then no doubt charge handsomely for it.

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