Investors fret Amcor CDI is first step to eventual exit

by Peter Ker and Simon Evans

Amcor boss Ron Delia reckons Australian investors will be "agnostic" about their locally-listed shares in the packaging giant being demoted to a CHESS Depositary Interest (CDI), but some like Ross Illingworth have news for him.

Plastic packaging manufacturer Amcor is the latest Australian company that will surrender its primary Australian listing on the back of a cross-border transaction in favour of a locally listed CDI.

Upon completing its $9 billion acquisition of US company Bemis, which was officially launched on Tuesday, Amcor's primary listing will shift to the New York Stock Exchange, leaving shareholders who want to continue owning the company within Australia with little choice but to hold CDIs.

Similar changes have in recent years confronted shareholders in property giant Westfield and the Recall document storage business, which was spun out of Brambles in 2013 and then acquired by US rival Iron Mountain in 2016.

Mr Illingworth runs boutique Melbourne outfit Kingfisher Capital, which serves as an investment office for several families, and he was left frustrated and "gobsmacked" in July when Iron Mountain announced it would cull its Australian CDI barely two years after declaring the retention of a local security was a "key transaction term" of the Recall acquisition.

"A bargain is a bargain, it is either solid or it is not, and in securities markets when you say something is a key term and you promise to do things, you should be good for your promises," he said.

Caution over precedent

Mr Illingworth believes Amcor shareholders should be mindful of the precedent being set by Iron Mountain.

"If Iron Mountain gets away with it scot-free, and welshes on one of their key terms, it sets a precedent for others to follow and that is not in Australian investors' interests," he said.

"My question to the Amcor chief executive is 'how committed are you to maintain the Amcor CDIs or are you going to review it like others have done a couple of years later?'."

Mr Delia said this week that Amcor shareholders have the choice of taking up the New York-listed shares or owning CDIs listed on the ASX, and disagreed with suggestions Australian investors might be left with a second-best option. "Our view is they are agnostic about this," he said. "Australian investors are becoming increasingly familiar with these sort of instruments."

Both ASIC and the ASX said Iron Mountain's vow to retain an Australian CDI was not a condition set by them, suggesting regulators are unlikely to penalise the American company for its backflip on maintaining an Australian security.

Call to protect interests

Nor is Iron Mountain the first company to dump an Australian CDI after promising to maintain one as part of a cross-border transaction.

Singapore Telecom had CDIs trading on the ASX for 14 years following its 2001 takeover of Optus, but killed them off in June 2015 because the liquidity had dropped to low levels.

North American alcohol giant Constellation Brands took seven years to dump its Australian CDIs after its $1.9 billion takeover of BRL Hardy, which owned wine brands including Hardys, Leasingham and Banrock Station.

Mr Illingworth said the trend was clear and was of particular relevance to retail shareholders, who may not be comfortable owning securities in foreign markets.

Amcor has a large tail of retail investors among its 78,000 shareholders. About 35,000 of those shareholders hold fewer than 1000 Amcor shares, while 34,000 own between 1000 and 5000 Amcor shares.

"The regulators need to make sure that the interests of particularly retail clients are protected," said Mr Illingworth.

"I think there are issues here for ASX and ASIC, because their duty is to look after the little people and make sure that when they are offered a substitute product to their exchange that companies don't just change their mind."

Australian Financial Review
10 August 2018
...................................................................

Brenner's farewells must continue

Catherine Brenner stepping down from the Art Gallery of New South Wales board of trustees is honourable given the oversight governance failures leading to the destruction of shareholder value and reputational damage on her watch as chair at AMP.

NSW Arts Minister Don Harwin is quoted as saying: "Catherine feels stepping aside from the board is appropriate while the royal commission continues its work ... a reflection of her desire to put interests of the gallery first."

Surely the same logic applies to Brenner's non-executive directorships at Boral and Coca-Cola Amatil? If nothing develops in the interim, the AGMs for Boral and CCA are likely to be quite lively because many AMP shareholders hold all three. 

Ross Illingworth

Melbourne, Vic 

Australian Financial Review
OPINION
2 May 2018
................................................................

AMP's future in Wilkins' hands

Finally, Catherine Brenner has fallen on her sword and the AMP board has outwardly taken responsibility for their failings uncovered by the Hayne royal commission. 

Unfortunately, Brenner's resignation and a board pay cut don't go far enough. Mike Wilkins, AMP's executive chairman, would be well advised to use the AGM on May 10 to commit to decapitating the snake of poor culture at AMP.

Surely the starting point to AMP's long and winding recovery is a commitment to a staged board renewal and the appointment of an external consultant to conduct a 'fit and proper' review (APS520) of the board and senior management. 

Wilkins will have a larger audience than 750,000 shareholders 'tuned in' to his chairman's address. Apart from ASIC and APRA and their masters, the Commonwealth of Australia, there will be 3.8 million AMP customers and 24million Australians that grant the 'social' licence for AMP to operate as a bank and wealth manager.

The question on everyone's mind will be: do I trust AMP? Wilkins will have the pitch of his lifetime.

Ross Illingworth

Kingfisher Capital Partners

Melbourne, Vic

Australian Financial Review
OPINION
30 April 2018
...................................................................


Who's fit to work for AMP

After the revelations at the Hayne royal commissionAMP's board must be having a close look at AMP's compliance with Prudential Standard APS 520 that covers 'fit and proper persons'.

The standard contains management and oversight obligations such as "appropriate skills, experience and knowledge and act with honesty and integrity". Ouch! 

APS 520 goes on to say when a "…regulated institution subsequently becomes aware of information that may result in a person being assessed is not a fit and proper, the regulated institution must take all reasonable steps, including collecting sensitive information as defined in the Privacy Act if relevant, to ensure that it can prudently conclude that no material fitness or probity concern exists. Where a concern exists, a full fit and proper assessment must be conducted."

By this stage the oxygen masks must have automatically deployed from the AMP board room's ceiling! The board has no choice but to engage an independent expert to complete fit and proper assessment of the board and senior management at AMP (including the three directors standing for re-election).

APS 520 makes it very clear that the "…prime responsibility for ensuring that an institution's responsible person is a fit and proper remains with the board of directors". Shareholders look forward to a detailed explanation from AMP's chairwoman Catherine Brenner's on the corporation's compliance with APS520 at the AGM on May 10.

Ross Illingworth

Melbourne, Vic

Australian Financial Review
OPINION
27 April 2018
..............................................................

Brenner must go

The steps taken by the AMP board to restore faith and trust in one of Australia's oldest financial institutions do not go far enough.

Catherine Brenner, AMP's chairwoman, missed the opportunity to fall on her sword and follow CEO Craig Meller out the door. This would have signalled to shareholders the board has taken some responsibility for the loss of faith and trust in AMP.

The elevation of board member Mike Wilkins to Acting CEO is a positive step. However, from all quarters the jungle drums are likely to beat louder by the day for Brenner to step down. The logical successor is Mike Wilkins with his plain-talking style. Only then will the venerable financial institution have a chance to restore the public's trust.

Ross Illingworth

Melbourne, Vic

Australian Financial Review
OPINION
22 April 2018
...................................................................

Myer must embrace Lew

I am confident the other 50,000 Myer shareholders ("Myer strives to defuse Lew brawl", October 12) would expect Myer's incoming chairman, Garry Hounsell, to comprehensively engage with Solomon Lew – the only Australian inducted into the World Retail Congress Hall of Fame. 

The difference in shareholder value creation between Solomon Lew's Premier Investments and Myer is as big as the Grand Canyon. A few back-of-the-envelope calculations: Myer's share price (excluding dividends) has declined from about $3.83 in November 2009 to around 73.5¢; a virtual wipe-out at 80.81 per cent.

Premier Investments (excluding dividends) has increased from about $7.87 to $13.14 – an increase of 66.96 per cent. 

High on Mr Hounsell's to-do list is, surely, to explore how the two retailers could become one? That is a logical conversation in a tightening retail scene and with the right deal structure, would benefit all shareholders.

Ross Illingworth

Kingfisher Capital Partners

Australian Financial Review
OPINION
12 October 2017
....................................................................

BHP criticised for accounting mea culpa, potash



     Australian Financial Review
     20 July 2017
     ...................................................................



    Australian Financial Review
   OPINION
   18 July 2017
   ...................................................................


     Australian Financial Review
     OPINION
     23 March 2017
     ...................................................................

   Australian Financial Review                                                                                        
   OPINION                                                                                                                 
   5 November 2015                                                                                                             

  ...............................................................

   Australian Financial Review
  OPINION
  29 July 2015
  ...................................................................

   Australian Financial Review                                                                                        
   OPINION                                                                                                               
   1 February 2015   
   ........................................................                                      

Frontrunner Snowy Hydro goes cool on Delta auction

The NSW government’s ambitions to steam ahead with another power sale after the $1.5 billion
privatisation of Macquarie Generation have hit a major speed bump with frontrunner Snowy Hydro
deciding to exit the process for Delta Coastal’s biggest plant.

Snowy has dropped out of the running for Delta’s coal-fired Vales Point generator after finding
the economics of a deal didn’t stack up.

Taking over Vales Point on the Central Coast would also have sat ill alongside the clean, green
image of Snowy’s hydro-dominated generation portfolio and its retail customer pitch.

Snowy, which is not using a financial adviser, is still in the running for Delta’s Colongra gas-fired
peaker, which has also attracted Origin Energy. But with a tough industrial power market it looks
unlikely to offer the sort of full price it paid in the $605 million purchase of retailer Lumo Energy.

The Snowy exit from Vales Point leaves the process without an obvious suitor although Marubeni
may still be sniffing around. A deal on the Delta assets is targeted for December.

Board resistance

Elsewhere, disgruntled Gowing Bros shareholder Ross Illingworth, the head of boutique fund
manager Kingfisher Capital, is tipped to face staunch resistance from entrenched directors when
he tilts for a board seat at the company’s annual general meeting in Sydney on Thursday.

It is expected Illingworth will criticise the board’s performance over recent years, while the board
will recommend against his nomination as a new director.

Gowing Bros is best known as the former owner of the eponymous Sydney menswear retailer,
which traded on the corner of George and Market Streets for nearly 150 years. Gowing Bros sold
the iconic Gowings store in 2001 and it has been defunct since 2005.

The business operates as a diversified ASX-listed investment company.

Over the five financial years from 2009-10 to 2013-14 inclusive, Gowing Bros has produced a total
shareholder return of 38.4 per cent, compared to a 54.4 per cent return from the S&P/ASX 200
Accumulation Index over the same period.

Underperformance

For the financial year ended July 2014, Gowing Bros underperformed the S&P/ASX 200
Accumulation Index by 1.3 per cent.

The shares are currently fetching $2.84, a discount of about 22 per cent to the company’s net tangible
asset backing of $3.67 as reported at July 31, 2014.

A lion’s share of approximately 71 per cent of Gowing Bros $237.3 million in total assets is invested
in neighbourhood shopping centres in Port Macquarie, Coffs Harbour and Kempsey – all on the north
coast of New South Wales.

About 19 per cent of Gowing Bros’ assets are held in equities. The remaining 10 per cent of the portfolio
is spread across cash, private equity and other assets.

Corporate lawyer Tony Salier has held office for 40 years and chaired the board since 1995. John Gowing
was appointed managing director of the family business in 1987, and has now been in office 32 years.
John Parker has been a director for 13 years. The newest director Robert Fraser, who joined the board
three years ago, will stand for re-election at the AGM.

However, Illingworth is not standing against Fraser, as the charter allows for up to six independent directors.

Illingworth’s Kingfisher Capital has been an investor in Gowing Bros since 2011. The fund was one of an
influx of non-family shareholders that joined the register after the estate of Mollie Gowing sold a 9 per cent
stake in the company in March 2010.

Australian Financial Review
STREET TALK
19 November 2014                                                             

..............................................................



 Australian Financial Review
 18 November 2014
 ...................................................................


Australian Financial Review
OPINION
24 July 2014
...................................................................

    Australian Financial Review
   OPINION
   20 June 2014
   ............................................................

Australian Financial Review
OPINION
January 2013
............................................................


     Australian Financial Review
    OPINION

    15 August 2011
    ...................................................................



       Australian Financial Review

     OPINION
     23 February 2011
...................................................................

Australian Financial Review
OPINION

Domain Managed by Melbourne IT