If you were the spindoctor for Allco Finance Group, you would be feeling pretty down this morning.
After deciding to hide executive chairman David Coe away, fearful that his famous temper would flare, you instead trot out CEO David Clarke, the fresh-faced newcomer barely 10 months in the job, to try and calm analysts and journalists alike.
Alas, most analysts and commentators were savage this morning and the market has followed suit, dumping shares in Allco Finance Group another 32c to 79c in morning trade.
I’m still staggered that the so-called quality independent directors such as Sir Rod Eddington, Bob Mansfield and former Cathay Pacific CEO David Turnbull put their names to yesterday’s reported “profit” of $87 million for the half year. They should have followed Barbara Ward out the door and resigned weeks ago.
It is pure fiction and hardly credible when $60 million of this “profit” came from the sale of some planes to an Allco fund, yet massive write-downs were not booked across other parts of the business.
The other scandalous revelation in the accounts was that AFG lent $43.3 million to Allco Principals Trust during the December half, albeit at a hefty interest rate of 15%.
Why the hell is a parent company with huge liquidity challenges lending money to the vehicle which houses the shares held by its key executives? These executives had better sell their shares, boats and mansions in a great hurry and pay this money back.
And how does that revelation sit with this disclosure on 23 January:
Allco Finance Group notes the following letter that has been received from Allco Principals Investment Pty Ltd (API) regarding certain information API has received from its margin lenders. Allco notes that it provides no guarantees or other financial support in relation to the margin loans referred to in the API letter. This is principally an API shareholder matter however, Allco as manager of the fund is monitoring the situation closely. Allco confirms that there are no developments with regard to Allco’s business which require market announcement.
No guarantees, just a separate $43.3 million loan that somehow wasn’t necessary to disclose at the time.
The Australian’s Bryan Frith is to be commended for calling on ASIC to investigate the tardy disclosure of this $2 billion market capitalisation trigger when it can cause $900 million in loans to fall due in 90 days. ASIC should also be probing the one-month delay in disclosure of those extra shares pledged to avoid a margin call last December.
Frith’s News Ltd colleague Terry McCrann was a lot kinder when he noted: “This has been a week in which directors of at least one company have well and truly earned their fees.”
And one of those chaps, of course, is none other than News Corp’s senior independent director, Sir Rod Eddington, the only Murdoch director who lives in McCrann’s home town of Melbourne. Come on, Terry. It’s all too obvious mate.
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.