asciano directors 'too dumb to see'

Asciano directors 'too dumb to see'

Philip Hopkins
July 23, 2009
ASCIANO got what it wanted - unanimous backing from shareholders for the company's $2.35 billion capital raising to pay down debt - but not before board and management took a tongue-lashing from the company faithful.

The company had already raised the money, but $1.55 billion worth of placements at $1.10 a share still required shareholder approval before it could be issued.

Shareholders gave the go-ahead at an extraordinary general meeting in Melbourne yesterday with more than 99 per cent approval.

However, a third resolution - a placement to the chief executive, Mark Rowsthorn, to enable him to retain his 10 per cent stake - lapsed because Mr Rowsthorn last week opted not to take up the allocation as he could not afford it. Instead he sold 40 million shares at $1.25 each and took out a "collar" loan over his remaining 36.2 million.

This allowed him to buy his full allotment of 76.2 million securities under the group's one-for-one entitlement offer at the lower price of $1.10 a security, giving him 4 per cent of the company's stock.

An activist, Stephen Mayne, lashed the board for not acting sooner. Unlike Transurban, which raised $1 billion last year, the Asciano board "dithered". This had resulted in a massive dilution for shareholders. "We all got cleaned up," he said.

Mr Mayne said Asciano's share price had plummeted. "You have let us down," he said, to cries of "Hear, hear" and loud applause.

A shareholder, Keith Turner, said Toll Holdings had much to answer for, having saddled Asciano with debt, but the Asciano board misled shareholders last year with rosy predictions. "Why weren't you frank with us? I will vote for the resolutions, but you were too dumb to see what was coming. I don't blame the recession. It was your fault," he said.

The chairman, Tim Poole, acknowledged the board may not have communicated as well as it should have but the process begun last August had been overwhelmed by the global financial crisis and banks' fear. "The option on the table today was not available in the last 12 months," he said.

Mr Poole said despite the crisis hitting some Asciano units, the underlying business was still performing well. Earnings before interest, tax, depreciation and amortisation was about $635 million last year, would be $655 million in 2008-09, and should increase further in 2010. The chief financial officer, Peter McGregor, said the $2.3 billion capital raising would reduce debt of more than $5 billion by 40-45 per cent.

Asciano's shares closed 3c, or 2.26 per cent, higher at $1.355.

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