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| Subject: NRMA confirms ERG shareholding (alliance agreement as well May 2001) Daily TelegraphSTEPHEN DOWNIE 24apr03 | |
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Author: Pharlap--Arwon I think did a good job in the 1929 and 1930 Melbourne Cups Steve |
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Date Posted: Wednesday, April 30, 01:58:03pm In reply to: Newspapers reporting result--March 7 2003 SMH 's message, "Noteholders have tickets to ride" on Thursday, March 06, 08:38:56am http://www.dailytelegraph.news.com.au/common/story_page/0,5936,6329731%5E21302,00.html ------------------------------------------------------------ NRMA road service up almost 50pc By CHARLES MIRANDA and STEPHEN DOWNIE 24apr03 ------------------------------------------------------------ MOTORISTS will pay up to 50 per cent more for NRMA road-side assistance under new user-pays fees aimed at rescuing the embattled group. ------------------------------------------------------------ NRMA president Ross Turnbull said immediate action was needed to "secure NRMA's future". ------------------------------------------------------------ He said the fee rise would save $7 million in the first year, on top of $20 million saved by slashing advertising costs, legal expenses, consultancy fees and travel. ------------------------------------------------------------ He made no apology, saying: "You can't be a member of an organisation where the fees don't rise". ------------------------------------------------------------ "We inherited a company with an operational loss of $60 million and, if we didn't do anything, in eight years we would be out of business," Mr Turnbull said. ------------------------------------------------------------ Under the recovery package, the existing $55 standard subscription fee for 24-hour a day roadside assistance will rise to $77.50. ------------------------------------------------------------ A new Basic Care package with a maximum limit of four call-outs a year will cost $67.50 while the cost of the deluxe assistance package will rise by $34.60 to $140. ------------------------------------------------------------ All the new prices do not include a one-off $44 joining fee. ------------------------------------------------------------ The new fees will come into effect on July 1 for new members and August 1 for existing members. ------------------------------------------------------------ When the fees were first proposed in 2002, NRMA's auditors predicted 150,000 people would quit the group. ------------------------------------------------------------ Mr Turnbull said he couldn't say how many would leave but "there will certainly be a drop out, but we have 2.2 million members and 20,000 new members a month". ------------------------------------------------------------ He encouraged people who were unlikely to use road service more than four times a year to opt for basic cover, which would cost the equivalent of 25 cents a day. ------------------------------------------------------------ NRMA's basic cover will be the second-most expensive in Australia after RAC Tasmania which charges $2.40 more. ------------------------------------------------------------ Previously, NRMA's insurance arm subsidised the road service operation but, when the company was demutualised, the latter had to pay the new insurance organisation costs plus 5 per cent. ------------------------------------------------------------ Last year, that bill was more than $30 million. ------------------------------------------------------------ Former NRMA director Richard Talbot said yesterday the rise was the price of bad management. ------------------------------------------------------------ "It really is one of Australia's greatest corporate cons," he said. "Members were told three things when NRMA was demutualised – insurance premiums wouldn't go up, but they've gone through the roof; that road service would be in a stronger position, well that's not the case; and road service fees would not increase." "A judicial inquiry into the NRMA and where the money has all gone is long overdue. ------------------------------------------------------------ "It is important that road service remains affordable and these fees will see many less well off people simply not be able to afford the increases." ------------------------------------------------------------ Mr Talbot said Australia's corporate watchdog ASIC had again failed and members should consider some form of class action against NRMA on the grounds of their lies. ------------------------------------------------------------ While NRMA blames falling global equity markets for a $34 million loss on its investment portfolio, industry sources point the finger of blame squarely at former chief executive Rob Carter. ------------------------------------------------------------ One of the disastrous investments Mr Carter chose was on then promising Perth smartcard ticketing company ERG. ------------------------------------------------------------ In 2000, its shares were trading about $4 and enamoured as he was of the company, Mr Carter plunged $20 million directly into ERG in early 2001, purchasing 10 million shares at between $2.05 and $2.30 a share. ------------------------------------------------------------ Problem was he did so with little consultation with the rest of the board. ------------------------------------------------------------ So, when ERG's shares eventually turned sour, as so many tech companies' did, so too did NRMA's investment. ------------------------------------------------------------ Yesterday, with ERG shares sitting at a paltry 11c, NRMA's $20m investment is worth just $1.1m. ------------------------------------------------------------ Said one economist who didn't wish to be named: "To claim the loss was due to equity markets is just horse shit. ------------------------------------------------------------ "The cost for the road services was supposed to be made up of dividend income from their capital. This guy (Mr Carter) did their capital by blowing it all on ERG." ------------------------------------------------------------ An NRMA spokesman yesterday admitted ERG was a large part of NRMA's loss. ------------------------------------------------------------ "ERG was a significant part of the writedown given we invested 20 odd million in it," he said. ------------------------------------------------------------ "But overall, the market's gone down considerably since last June. Everyone's felt it and we've got our stuff spread across a range of (investments)." ------------------------------------------------------------ Both the Australian Competition and Consumer Commission and Australia Securities and Investment Commission declined to comment. ------------------------------------------------------------ Irate NRMA members yesterday slammed the increases as a "rip off" and "a cover for mismanagement". ------------------------------------------------------------ "Such an increase isn't justified," Frank Pender from Parramatta, a member for 45 years, said. ------------------------------------------------------------ "It is a cover for mismanagement sins and has been a continuous process since demutualisation. ------------------------------------------------------------ "Management are the ones who make mistakes and we are the ones who now have to pay for it." ------------------------------------------------------------ Mr Pender said he would be seriously considering all his options when his membership expires later this year. ------------------------------------------------------------ THE NEW NRMA RATES: Basic care: $67.50, limit four call-outs, 8km free towing in metro area Classic care: $77.50, unlimited call-outs and 20km free towing in metro area Premium care: $140 (up $34.60), unlimited call limit, 20km free towing Joining Fee: $44 [ Next Thread | Previous Thread | Next Message | Previous Message ] |
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