Federal Court judge Peter Jacobson, who was most recently in the news with that Men at Work judgment over Down Under, will have much to consider this Friday when he contemplates approving the proposed scheme of arrangement for the $2 billion Seven-WesTrac related party transaction.
The deal was reasonably comfortably approved by shareholders in an unusual event that saw the two powerful proxy advisory firms, RiskMetrics and CGI Glass Lewis, have their against recommendations largely ignored.
As a shareholder asking questions at the Seven EGMs in Sydney yesterday, it was very disappointing to encounter the belligerence from Seven’s executive directors Bruce McWilliam and David Leckie, although the latter’s contribution was limited to juvenile interjections, groans and gestures which showed disdain for the process.
The Australian’s James Chessell, whose wife works for PR firm Third Person which handled the deal for Seven, reported the following today:
“Commercial director Bruce McWilliam effectively ran the show with equal measures of charm and aggression. McWilliam, a lawyer who worked previously for Rupert Murdoch, clashed with Stephen Mayne each time the shareholder activist got up to pose a series of questions.”
McWilliam was most sensitive on the question of RiskMetrics and suggestions in yesterday’s media that advisers to the Stokes camp were sending letters to RiskMetrics containing identical claims to those sent by Grant Samuel, supposedly an independent adviser to the independent directors.
McWilliam looked a bit of a goose after denying that Grant Samuel sent any letter to RiskMetrics when director Ross Grant did precisely that, as The AFR’s Rear Window column noted today.
There were plenty of other strange claims and antics at yesterday’s meetings. One Chinese shareholder who spent 20 years working for Caterpillar was teasing out his criticisms of the WesTrac China valuation when Leckie literally gave meeting chairman Peter Ritchie an extravagant wind-up signal.
These were supposed to be meetings for the independent shareholders run by the three long-serving independent directors, yet Dulcie Boling and Murray Wells said nothing whilst meeting chairman Peter Ritchie often took a back seat to McWilliam.
After listening closely to more than two hours of discussion and reading much of the media commentary, I believe Justice Jacobson should take a good look at several issues related to selective briefings of institutional investors which provided additional information to that disclosed in the explanatory memorandum.
For instance, just what were the two largest institutional investors, Perennial and Ausbil Dexia, told about Westrac’s forward order book and board succession planning?
This is what The AFR reported today: “Earlier this month, sources close to the negotiations between ACE and fund managers said Mr Stokes had indicated Mr Ritchie and Ms Boling, who have been Seven directors since 1991 and 1993 respectively, would resign after the Seven-WesTrac merger was completed on May 13.”
Yet when Mr Ritchie was asked about this at the meeting on Tuesday, he said: “None of us have plans to resign.”
Similarly, whilst the fund managers were lauding their so-called deed of indemnity providing an estimated $130 million of downside protection, Peter Ritchie took a contrary view, telling shareholders: “Personally, I don’t think it adds anything to the deal.”
Before approving this transaction, Justice Jacobson should call the various parties to the Federal Court and establish precisely what legally enforceable agreements or undertakings have been made between Seven’s billionaire controlling shareholder, the independent fund managers with the swing vote on this contentious deal and the independent directors who are meant to representing us non-Stokes Seven shareholders.
Any shareholder who wishes to appear on Friday only has to fill in the required form and lodge any accompanying affidavit by 5pm tomorrow.
Seven’s man to serve is Freehills partner Geoff Healy.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.