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| Subject: In the West Australian today Raider adds ERG to fold By Neale Prior West Australian 28/3/03 | |
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Author: about 7.6 million of the 18.5 million notes on issue. |
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Date Posted: Friday, March 28, 12:58:29am In reply to: Newspapers reporting result--March 7 2003 SMH 's message, "Noteholders have tickets to ride" on Thursday, March 06, 08:38:56am Posted by: vovo Mar 28 2003 9:40:02:107AM Reply to post # by Go to Post # ----------------------------------------------------------- Previous Respond Message List Next ----------------------------------------------------------- In the West Australian today Raider adds ERG to fold By Neale Prior ----------------------------------------------------------- THE man who is today poised to snatch control of ticketing group ERG has emerged as the key figure behind a global business empire spanning Australian buses, New Zealand and Scottish airports, African mines and a famous English rugby union team. ----------------------------------------------------------- London-born Australian citizen Duncan Saville runs a business valued at more than $500 million from a harbourside mansion in Sydney - and wherever else his love of sport and its big events take him. ----------------------------------------------------------- Yet the former right-hand man to legendary Kiwi corporate raider Sir Ron Brierley will not be making the trip to Perth this morning to witness the penultimate public battle in his 18-month campaign to secure a commanding position in ERG. ----------------------------------------------------------- The 46-year-old accountant turned dealmaker is set to hold up to 40 per cent of ERG as a result of the restructure needed after 18 months of losses that have wiped out more than $350 million of shareholder value. ------------------------------------------------------------ Mr Saville's first big known play in his own right was in the late 1980s with the acquisition of private water assets in the south-east of England and stakes in other UK water companies. ----------------------------------------------------------- "I'm a long-term investor," he told the Financial Times in 1989. ------------------------------------------------------------ In 1997, he spent £3 million ($7.9 million) acquiring the Twickenham-based rugby union club Harlequins. ------------------------------------------------------------ Mr Saville is reported to have a home in Surrey and bases himself in a luxury mansion in exclusive Vaucluse. He bought the property 10 years ago for $4.75 million as a family base for his wife Julie and two daughters. Since 1994, Sydney housing prices have risen at an annual rate of more than 10 per cent. ------------------------------------------------------------ He also maintains a truly international business empire, including London-based investment fund Special Utilities Investment Trust (SUIT) that has assets around the world valued at more than $320 million and sharemarket listings in London and NZ. ----------------------------------------------------------- While ERG was burning cash last year in its core transit business and its failed foray into smart-cards development, SUIT and various other interests linked to Mr Saville were snapping up ERG convertible notes. ----------------------------------------------------------- ERG noteholders are to meet in Perth this morning to vote on a restructure that will see the noteholders, now owed more than $250 million, swap their debt paper for more than 1.7 billion shares in the company. ----------------------------------------------------------- The restructure will be voted on by shareholders at a meeting on April 30. But they face little choice but to accept because of the state of ERG's balance sheet after more than $350 million in losses. ----------------------------------------------------------- Once the dust has settled on the restructure, Mr Saville's various interests could hold more than 40 per cent of ERG through conversion shares and their bankrolling of ERG with a $25 million loan and support for a post-restructure rights issue. ----------------------------------------------------------- His ERG move has some similarities to his play two years ago when he bought more than half of the converting preference shares in the crumbling Perth-based mining group Resolute. ----------------------------------------------------------- Mr Saville ended the controversial reign of former Arthur Andersen partner Michael Carrick as chief executive and founder Bob Pett as chairman. ----------------------------------------------------------- He remoulded the Resolute board through nominees Peter Huston, a Perth lawyer, and engineer Peter Sullivan, who is now managing director of the new vehicle, Resolute Mining, after a restructure last year saw Saville interests hold about 40 per cent of equity. ----------------------------------------------------------- Neither Mr Sullivan nor Mr Huston would comment yesterday. ----------------------------------------------------------- Mr Saville could not be contacted either, with an associate saying he was overseas. ----------------------------------------------------------- He is a director of Sydney-based Permanent Trustees as well as NZ infrastructure investor Infratil, which has stakes in airports in Wellington and Glasgow, extensive power assets and once indirectly owned nearly half of Westralian Airports Corporation. ------------------------------------------------------------ One source said yesterday Mr Saville was willing to take a monitoring role in investments but would make suggestions. "Like any shareholder, his main concern is that management is adding value to the business," he said. ------------------------------------------------------------ He showed claws in 1999-2000 when an equity and $1 million debt investment he made in a restructure of bus group Greyhound Pioneer was performing badly despite his appointee, Stephen Jones, holding various roles that included chairman and management director. ------------------------------------------------------------ Mr Saville fell out with Mr Jones, who claimed he was forced to resign by his former supporter but later returned to the board. ------------------------------------------------------------ Then Mr Saville blocked a proposal for the business to be sold to NSW rival Nowra Coaches and appointed a receiver to protect his $8 million-plus exposure to the struggling group. ------------------------------------------------------------ Another bus rival, McCaffertys, bought Greyhound Pioneer and left Saville interests with more than 10 per cent. ------------------------------------------------------------ The big question now is what he plans for ERG. ------------------------------------------------------------ One company representative said yesterday Mr Saville had given no indications of a plan for a purge and he got on well with ERG chief executive Peter Fogarty, the architect of ERG's debt-laden structure. ------------------------------------------------------------ An information memorandum sent to ERG shareholders said Mr Saville's companies were generally passive investors and had indicated they did not intend to be involved in day-to-day operations. ------------------------------------------------------------ But his interests would seek representation on the ERG board through the appointment of Mr Saville or a nominee as a director. ------------------------------------------------------------ He is also pushing for a cut in the ERG board to no more than five directors. ----------------------------------------------------------- Analysts have been critical of the ERG board and questioned its capacity to stand up to the forceful and persuasive Mr Fogarty, who charmed brokers and analysts at the height of the dotcom boom with his vision for ERG's smart card-based transit ticketing systems. ------------------------------------------------------------ At the height of market bullishness about the stock, the ERG board made the $250 million issue of convertible notes at $13.50, a hefty premium to the prevailing market price but which capitalised on market hype about the stock heading beyond $20. ------------------------------------------------------------ Yet the company was hit by delays in its ticketing contracts and problems financing the massive investment needed for projects and technology development, making a corporate collapse or a takeover by its creditors almost inevitable by late last year. ------------------------------------------------------------ In a weakening market, Mr Saville's interests acquired about 7.6 million of the 18.5 million notes on issue. ------------------------------------------------------------ (Voluntary Disclosure:No Position Short Term rating: Long Term Rating:) OZeStock Advertisment:"Get yourself an institutional advantage!" 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| Newspaper analysis--ERG beginning to become sexy stock (NT) | harbourside mansions jetsetting etc. | Friday, March 28, 05:04:12pm |