The digs may be a little more respectable but the argument remains the same. About a decade ago, Sir Ron Briefly, Garry Weiss and the GPG bother squad hired a minibus for the long trek from the Sydney CBD to Horsley Park, on the city’s western fringes, to attend the Brickworks annual broad meeting.
The digs may be a little more respectable but the argument remains the same. About a decade ago, Sir Ron Briefly, Garry Weiss and the GPG bother squad hired a minibus for the long trek from the Sydney CBD to Horsley Park, on the city’s western fringes, to attend the Brickworks annual broad meeting.
Their mission? To bust up the cross shareholding bargain between Brickworks and Washington H Soul Patterson that had deep-rooted the Milliner family’s influence at the helm of both companies, a structure that even then was measured an anachronism. They failed in their quest and shortly afterwards sold their stake in both companies. But the issue has refuse to die.
At noontime today, round one in the latest crusade against the Miller family will begin in earnest at chic downtown watering hole The business. This time, the battle is being waged by Perpetual nest egg’ Matt Williams, who is expected to pepper the Brickworks board with questions about his plan to name an independent director to the WH Soul Patti son board.
want ad: Story continues belowWilliams’s rationale is largely the same as Brierley’s. breach the shackles that bind both companies will liberate $1.5 billion in hidden value tied up in the structure for the benefit of his investors.
The fight has turned nasty in recent weeks, particularly since Perpetual went public with a letter to WH Soul Pasts shareholders titled: gratify SUPPORT GOOD CORPORATE GOVERNANCE.
In retaliation, WH Soul Potts – itself a large investor – voted against the executive remuneration package at uninterrupted, which no doubt inflamed the already tetchy relationship between Parietal’s corporate arm and its funds running team.
With shots living being fired in all directions, the ensuing smoke has obscured the main focus of consideration.
The Millner family, led by patriarch Robert, has absolute control of two large public companies with only about 8 per cent of the equity. This has been achieved by a structure common through the 1970s and 1980s and once favoured by entrepreneurs like John Spalvins.
WH Soul Patts owns 45 per cent of Brickworks. In turn, Brickworks owns 43 per cent of WH Soul Patts. The directors of each – largely the same – vote those shares and so thwart other shareholders, such as Perpetual, which is the largest stakeholder.
Along with Robert Millner, who has been on the WH Soul Patts board for 27 years, there is his cousin Michael with 14 years, his recently appointed son Thomas, his brother-in-law David Wills with five years, his cousin’s husband Peter Robinson with 27 years, and long-term associates David Fairfull with 14 years and Robert Westphal on five years. It’s hardly a model for good corporate governance, even by 1980s standards.
The only problem for Williams at Perpetual is that both companies have performed reasonably well. And, unlike Perpetual Ltd’s corporate team, neither pay their executives or directors the kind of stratospheric salaries now commonplace in corporate Australia.
Nevertheless, Williams has a valid argument. With Soul Patts about to dispose of its 60 per cent stake in coalminer New Hope, worth about $3 billion, the lack of an independent director on the board of the two companies delivers little, if any, transparency on how the cash will be utilised. Given his outfit has a bigger stake in both companies – with a combined stake of about 12 per cent – than the Millner family, his agitation at the structure is easy to understand.
Perpetual has put forth Robert Fraser to be appointed to the WH Soul Patts board, in place of Robert Millner’s son Thomas, who recently was appointed to fill a vacancy. That meeting, round two, will be held on Friday. But the cross shareholdings doom the proposal to failure.
Still, signals are emerging from the smoke that the Millner family may be considering some kind of appeasement.
After being entrenched for so long, however, the family doesn’t plan on backing down easily. Nor will members be cajoled into action, particularly in such public fashion. Having become accustomed to absolute power, any changes will be made at their behest, rather than that of outsiders.
Those changes, whatever they may be, will only take place after the sale of New Hope.
The obvious way to liberate the value locked up in the cross shareholdings is for WH Soul Patts to launch a takeover bid for Brickworks. The company essentially would be buying 43 per cent of its own stock, which when cancelled, would seriously lift the earnings per share of the parent.
And given it no longer would be takeover proof, WH Soul Patts may trade at a premium rather than the huge discount to asset values which has become the norm. As compelling as the logic sounds, there is no guarantee that will eventuate.
Meanwhile, Williams’s strategy has come under fire from an unusual source – his former boss Peter Morgan, who left Perpetual several years back to start his own firm, 452 Capital. It was Morgan who put Perpetual into WH Soul Patts and Brickworks all those years ago when he was head of investments.
The arrangement had served investors well, he said, and Perpetual was putting short-term gains ahead of long-term returns. For good measure, he then stuck the boot into Perpetual Ltd for knocking back a private equity bid at almost double the present share price.
But Morgan is not a man to harbour a grudge. Stranded at Horsley Park all those years ago and desperate to get back to the city, he gratefully accepted a ride in the Brierley Weiss minibus despite the shootout at the annual meeting
