sack the board, page-25

Call for Qantas directors to resign PRINT FRIENDLY EMAIL STORY
AM - Monday, 7 May , 2007 08:08:07
Reporter: Peter Ryan
TONY EASTLEY: The $11-billion private equity bid for Qantas is effectively dead this morning after the Takeovers Panel refused to hear a last minute appeal.

In what's most likely a final and fatal blow, the panel rejected an application to allow a late acceptance from a big US investor that would have extended the world's largest airline buyout by two weeks.

As our Business Editor Peter Ryan reports, today's focus is likely to be on Qantas' share price and calls for the airline's board to be sacked.

PETER RYAN: Whether it was confusion, poor communication or a miscalculated gamble, what counted in Airline Partner's bid for Qantas was a simple deadline.

And when that critical moment passed on Friday night the consortium itself put up a white flag, but hastily lowered it when a New York hedge fund manager agreed to hand over a five per cent slab of Qantas shares, taking acceptances to just over the required 50 per cent level.

According to APA (Airline Partners Australia), the razor thin margin, though late, should still be considered and appealed to the Takeovers Panel to make an exception.

But the panel was in no mood for excuses, and after meeting over the weekend told APA the deadline was final.

TAKEOVERS PANEL RULING (voiceover): The panel does not accept that Qantas shareholders have not had a reasonable opportunity to participate in the offer, or that a single shareholder failing to deliver its acceptance by the close of the offer has denied shareholders a reasonable opportunity to participate in the offer.

PETER RYAN: The decision to block APA's appeal came as no surprise, according to long time Qantas watcher Brent Mitchell of Shaw Stockbroking.

BRENT MITCHELL: This was seven hours late. If it was a day late, would it be allowed to be approved? Two days late? It just opens up a whole Pandora's box that I don't think the Takeovers Panel would want to enter into.

PETER RYAN: In essence, the Takeovers Panel appears to be saying that simply because one big sophisticated investor from the United States misses a deadline, that's no excuse. Do you agree with that ruling?

BRENT MITCHELL: Look, I agree with that especially as APA themselves made a great point of saying that the bid would be final as at that time, and no late acceptances would be processed. So, it's very much what they said would happen and they've been forced to stick by it.

PETER RYAN: While APA says it will seek a review of the panel's rejection of the appeal, the real focus of the failed bid is turning to the future of the Qantas board.

MARCUS PADLEY: I think they have one, put a lot of institutions offside and two, they have also almost lost their independence as representatives of the shareholders.

PETER RYAN: Marcus Padley of the investment newsletter Marcus Today says some Qantas directors need to go.

MARCUS PADLEY: I think they've compromised themselves, and I think there would have to be some board changes, quite honestly.

PETER RYAN: The Chairman of Qantas, Margaret Jackson, has been perhaps the most vocal in urging shareholders to take the bid. Does she need to step down?

MARCUS PADLEY: She in the person in particular who has made really very public comments about some managers who did not accept the bid, and I think yeah, she is very much the person in the firing line along those lines.

PETER RYAN: What could be the final nail in the coffin of the Qantas bid has been welcomed by staff, unions and politicians concerned about issues such as national interest.

Peter Somerville of the Air Pilots Association expects another bid soon. But he remains critical of a strategy that focused on management rewards rather than the future of staff.

PETER SOMERVILLE: We would still like to see any future bid or new owners for Qantas take the staff with them. The pilots and the other staff of Qantas want to be part of a growing, profitable and strong Qantas. Not just spoken of as human resources, but part of the company.

PETER RYAN: Qantas last night issued a statement, acknowledging the bid from Airline Partners had failed. The airline's shares are now expected to go into a trading halt this morning amid expectations of a heavy sell off, while the market assesses the fallout of an audacious takeover bid gone wrong.

TONY EASTLEY: Business Editor Peter Ryan.

And AM asked for an interview with Qantas Chairman Margaret Jackson but was told she's unavailable.