Irrepressible Queensland investment banker Jenny Hutson appears to have put together an intriguing deal for an as-yet-unnamed investor who has spent more than $2.5 million to become the largest shareholder in both Peanut Company of Australia and Capilano Honey.
Queen Street Nominees was revealed yesterday as the registered owner of 19.83 per cent of Peanut Co and as having accumulated a 12.7 per cent stake in the soon-to-be-ASX-listed Capilano - enriching former owner, Darren Olney-Fraser's Mariner Corporation, in the process.
Intriguingly, Queen Street Nominees did not say it was holding the stock on behalf of a client - as it did, for example, when it was representing Queensland childcare entrepreneur Doug Lomas when one of his vehicles became a substantial shareholder in G8 Education. G8 is a company that Hutson also happens to chair, so long as she gets re-elected at the annual meeting next month.
Lomas told Insider he was not the buyer of the food companies' shares, and Hutson would only say: "It is one of our clients who is interested in the food industry."
She did reveal that the Capilano share sale was conditional, and Olney-Fraser confirmed that the $2.12 million purchase of his stake was "subject to finance".
Queen Street Nominees is owned by Brisbane lawyer Rachel Weeks, who has a long association with Hutson, having acted for her advisory company Wellington Capital in its battles with grumpy investors in the Premium Income Fund. Weeks did not respond to queries from Insider before publication on whether she was acting on her own behalf or for a client.
Insider pointed out to Hutson the coincidence that her former life partner, Brisbane legal figure Brett Heading, was also a significant investor in Peanut Co with more than 18 per cent - and was also chairman a few years back.
Hutson said she and Heading had two sons together but split in 2007, and "he's a good lawyer and I'm a good investment banker".
Still, Insider hears that the Peanut Co board, headed by Ian Langdon, may have taken legal advice before agreeing to register the Queen Street Nominees stake just in case there was any connection between the two major shareholders.
Because Peanut Co is a public company, even though it is not listed, it is subject to Takeovers Code rules that forbid associated shareholders to acquire more than a combined 19.99 per cent of the company without making a takeover offer. Had the Queen Street Nominees and Heading's stake, in the name of Technology Farmers, been related they would have controlled almost 40 per cent of Peanut Co.
Given that Langdon sent a letter yesterday to his shareholders saying the board had registered the nominee holding at a board meeting on Monday, Insider can only assume there are no associations between Heading and Hutson's client. Besides which, Heading spent more than a decade as a member of the Takeovers Panel, so is hardly likely to be in any doubt about the law.
Guinness Peat Group had a near 25 per cent stake but Mariner could not buy all of that without a bid. Langdon noted that the balance of the stake was bought by Ross Burney - who used to work for GPG and represents it on the Peanut Co board.
Meanwhile, Mariner and Olney-Fraser have done well from their brief investments in the four food company stakes hand-passed to them by the Sir Ron Brierley-associated GPG early this year.
It was only on February 2 that Mariner announced it was buying the shares in Peanut Co, Capilano, egg company Farm Pride Foods and cannery company Tasmanian Pure Foods for a total of $3.16 million.
Quoted at the time, he said: "We like food. It's tangible. For the last 10 years or so, there has been too much investment in structuring and financial services."
It seems he likes money even more. Mariner did not finalise the purchases until the middle of this month, and they are now all gone almost before the ink had time to dry on the share transfers.
The acquisition of Mariner's 12 per cent stake in Farm Pride by interests associated with the egg company's board seemed, in Insider's view, to leave a truck-sized hole in the Takeovers Code given control of the company appears to have passed without minorities getting any say, or compensation.
Mariner did not make any profit on Tasmanian Pure Foods but turned a collective $860,000 gain on the other three - or a 27 per cent return in less than a month.
LIFE'S A BEACH
Citigroup has had a corker start to the week, picking up lead manager roles in nearly $800 million worth of capital raisings in two days.
First came its gig in Bank of Queensland's larger than forecast $450 million tapping of capital markets with an underwritten issue. Then yesterday it was named as one of three joint lead managers on Beach Energy's $345 million combination equity and convertible note offering. Goldman Sachs and Macquarie are its partners in the underwritten raisings.
Beach is chasing $195 million from new shares and another $150 million in convertible notes. While the shares will be, like Beach's existing equity, ASX listed - the company has received preliminary approval for the notes to be traded on the Singapore market.
The idea there is that the notes are being aimed at Asian and European investors, who obviously feel more comfortable trading out of Singapore than Australia.
HUGS ALL ROUND
Mobile Embrace was embraced by the market yesterday after it revealed that corporate clients are embracing its mobile applications and advertising services.
Turnover in Mobile Embrace topped 16 million shares yesterday, or about 6.5 per cent of total equity, and the shares soared 1? to 3.1? - a handy gain in any micro-punter's book. Happiest of all would be Chuck Auster's Auster Capital Partners, which last month extended its relationship with Mobile Embrace by taking 61 million shares at 1.8?. It is now nearly $800,000 in front on a $1.1 million investment.
insider@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Who became the largest shareholder in Peanut Company of Australia and Capilano Honey?
The registered owner shown is Queen Street Nominees, which was revealed as holding a 19.83% stake in Peanut Company of Australia and a 12.7% stake in the soon-to-be-ASX-listed Capilano Honey. The article says an as-yet-unnamed investor, through arrangements put together by Queensland investment banker Jenny Hutson, spent more than $2.5 million to become the largest shareholder in both companies.
What is Queen Street Nominees and who owns it?
Queen Street Nominees is the entity registered as the owner of the stakes in Peanut Co and Capilano. It is owned by Brisbane lawyer Rachel Weeks, who has a long association with Jenny Hutson. Weeks had not confirmed whether the holdings were for herself or on behalf of a client at the time of reporting.
What role did investment banker Jenny Hutson play in these food stock deals?
Jenny Hutson appears to have put together the deal for an unnamed client interested in the food industry. She confirmed the buyer was one of her clients but did not identify them. The article also notes Hutson chairs G8 Education (subject to re-election) and has been involved in arranging nominee holdings in the past.
Are there any Takeovers Code rules investors should know about in relation to these stakes?
Yes. The article highlights that because Peanut Co is a public (but unlisted) company it is subject to Takeovers Code rules that forbid associated shareholders from acquiring more than a combined 19.99% without making a takeover offer. If the Queen Street Nominees stake and another major shareholder had been related, their combined holdings would have exceeded that threshold.
What happened with Mariner Corporation and the purchases of food company shares?
Mariner Corporation and its former owner Darren Olney-Fraser announced on February 2 that they were buying shares in Peanut Co, Capilano, Farm Pride Foods and Tasmanian Pure Foods for a total of $3.16 million. The purchases were finalised mid-month and Mariner and Olney-Fraser subsequently sold most positions, producing a collective gain of about $860,000 (a roughly 27% return) on three of the four investments; Mariner did not make a profit on Tasmanian Pure Foods.
Was the Capilano share sale conditional and was finance involved?
Yes. Hutson disclosed that the Capilano share sale was conditional. Darren Olney-Fraser confirmed that the reported $2.12 million purchase of his stake was 'subject to finance,' indicating the transaction depended on securing funding.
Did any of the share transfers raise shareholder or minority-protection concerns?
The article flags concerns, particularly around Farm Pride Foods: Mariner’s 12% stake in Farm Pride was acquired by interests associated with the egg company’s board, and Insider suggested this transfer may have created a 'truck-sized hole' in the Takeovers Code protections because control appears to have passed without minorities getting a say or compensation.
What should everyday investors take away from this flurry of activity in food stocks like Peanut Co and Capilano Honey?
The key takeaways for everyday investors are to monitor substantial holder notices and nominee registrations closely, because nominee-owned stakes and quick turnover can change control dynamics. The article also shows some investors see food assets as 'tangible' and capable of rapid short-term gains, but such activity can bring conditional deals, finance contingencies and potential takeover-code implications that retail investors should be aware of.
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