The Sydney Morning Herald from Sydney, New South Wales, Australia • Page 29

Friday, November 24, 1989 28 The Sydney Morning Herald BUSINESS! Best value in assets sale: Sir Ron BIL proposes Ariadne carve-up By BRUCE HEXTALL Ariadne Australia Ltd faces the death sentence if Sir Ron Brierley succeeds in gaining control of the beleaguered investment group's board. Sir Ron said yesterday that the Ariadne name should be buried forever and that its assets should be sold to realise some value for long-suffering shareholders. "I am not advocating a fire sale, but I believe an orderly sale of assets will realise more value than the company can achieve if it stays as it is." Sir Ron said Ariadne had no future as a corporate identity in Australia as its name alone would produce "so many bad feelings and grievances whenever it The future direction of the group, which held the dubious honour of notching up Australia's biggest corporate loss ($640 million) until surpassed by Bond Corporation Holdings Ltd, is set to be decided at its annual general meeting in Brisbane on Tuesday. Sir Ron, whose Brierley Invest ments Ltd has built up a strategic 17 per cent stake in Ariadne, hopes to gain a seat for himself and two other BIL representatives when Ariadne's shareholders vote on board representation at the meeting. He is also seeking to remove all other directors, with the exception of chairman Mr Barry Capp.

Ariadne's two other major shareholders, Mr Frank Carr's Ampersand International Ltd and Mr Malcolm Edwards Essington group, also are seeking dominant positions on the board. But because these two groups situation, but it requires a strong concentrated effort" The protracted dispute between Ampersand and Grylis over ownership of shares still beneficially held by FAI Insurances is unlikely to be resolved in time for Tuesday's meeting meaning Ampersand will be able to exercise voting control of the stake. However, Mr Edwards is understood to be taking legal advice on the option of applying for an injunction restraining Ampersand from voting the shares at the meeting. are locked in a legal wrangle over the ownership of a 19.7 per cent stake in Ariadne, Sir Ron claims his company represents the best bet for Ariadne shareholders. "What the company needs is a strong shareholder with strong representation on the board and without problems of its own." Sir Ron admitted that the Ariadne play represented a return to the type of corporate play that forged his reputation as a corporate raider recognising undervalued assets, gaining control and then unlocking that value.

"It's a very straightforward Chennells told CBD the company, which now has SNZ29 million in cash and no liabilities, would proceed even if it meant forcing Rod into bankruptcy. In an unrelated matter last month, Rod missed out on recovering $39,000 from his former Darling Point neighbour Lorraine St Clair. That related to an incident several years back when Rod took over the mortgage on his neighbour's house which he intended to bulldoze and transform into tennis courts and the like. Negotiations on the sale went ahead, but the deal fell through and Rod took legal action which he won but eventually lost on appeal. Roach to Pickard to keep eye on Adsteam's AOG ADELAIDE jetsetter John l3 Spalvins may yet have to jump a few regulatory hurdles with the NSW Government following his successful raid last week on Sir Ron Brierley's old outfit, IEL.

The NSW Minister for Minerals and Energy, Neil Pickard, is known to be keeping close tabs on the situation, since IEL controls a large whack of AGL. IEL's oil and gas offshoot, AOG, holds about 41 per cent of the gas company a situation that created a few sticky problems with the State Government a few years back when Ron orchestrated a canny raid on the AGL share register. The Labor minister at the time, Peter Cox, was kept busy for months when his plans to lift the AGL shareholding limit from 3 to 5 per cent was put under threat by Ron's actions. After a lengthy court battle, IEL was able to retain its holding and appeared to get on well with AGL head Maurice Williams. Spalvins keeps mum on plans for AGL soon, savs Jarrett MELBOURNE: Elders Finance's wholly owned stock-broking subsidiary.

Roach and Co, is to be merged with at least one other broking firm, according to chief executive Mr Ken JarretL John Spalvins a few hurdles to jump. "He's working for me," Bruce replied. "Yes, but what's he doing?" "He's working for me." "Oh, right." The Judge link goes back some years, in particular to a fateful day in 1985 when Bob, Bruce, and Stephen Tsung and Chinese press queen Sally Aw gathered on a Bain junk on Hong Kong harbour to plot Aw's exit from Honkers and Judge's entry. Having made Bain a tidy little sum on both deals and myriad others, Bob later let go the Bain partnership to head up Porky Morgan's ill-fated Honkers office. As a vigorous promoter of Aussie equities in Honkers, it comes as no surprise that he should pop up in Oz after his long and profitable stint in the tropics.

By BRUCE HEXTALL Resources Writer The Australian Gas Light Company has adopted a carry-on-regardless attitude since Mr John Spalvias Adsteam group of companies grabbed control of the gas utility's major shareholder, Australian Oil and Gas. AGL's chief executive, Mr Maurice William, said yesterday that there had been no indication from Mr Spalvins whether he intended to keep control the group via the AOG shareholding. "All we have done is inform the minister that there has been a change of control at that level," Mr Williams said. Control of AGL is governed by the NSW Gas Act and is subject to ministerial approval which restricts Adsteam's business. Also a sale would reduce the debt burden involved in acquiring IEL.

Speculation that Adsteam could place AOG on the market has pushed the company's share price up 10c since last week. Mr Williams contents followed AGL's annual general meeting in Sydney yesterday where shareholders were told the group was back on track after a troublesome year due to its association with the collapsed Hartogen Energy group of companies. AGL's problems were twofold. It held 19.9 per cent of Hartogen, which has been written off as valueless, and it was caught holding 54 per cent of Paringa Mining and Exploration Pic after Hartogen failed to pay an agreed $137 million for it. That stake as since been sold to ACM Gold for $67.7 million and AGL is attempting to recover the difference from Hartogen.

AGL chairman Mr Jack Davenport told the meeting that those problems were now behind it and core businesses were performing well, with a 24 per cent increase in profit for the first quarter. Mr Jarrett would not comment on the possible candidates for the merger, but said it was likely to be completed "within three Elders' decision to "dilute" its involvement in the loss-making broking industry would be consistent with the group's stated intention of restructuring all its operations within three months through the sale of its loan book Jhe ability of one shareholder to Timor well plugged HOPES have died over the prospects for BHP's Dis-corbis 1 well in the Timor Sea. It was plugged and abandoned this week. After pouring about $15 million down the hole, the company encountered only a few oil shows, some gas and a host of technical problems instead of the millions of barrels they had hoped to find. Never one to be pessimistic, however, the company now secretly is pinning its hopes on a risk wildcat well, named Rowan, closer to the Jabiru and Challis fields.

Fighting a cash call pass control to anoiner. But market analysts believe control of the company is now in play. Mr Spalvins gained control of AOG when he acquired a majority interest in Industrial Equity Ltd. They say the sale of AOG would be a logical step for Mr Spalvins as energy is not a core part of URO National Corp, the slimmed-down Kiwi com pany spawned by Rod "The This mess is a forex ONE forex loan litigant has come a little closer to unravelling the complex chain of events and transactions involved with his multi-currency loan transaction with Elders Finance Group. During a Federal Court directions hearing yesterday, Cedric Constance was given access to extracts of a wide range of documents and records which he hopes will give some clues to why his $1.7 million loan went wrong.

Previously, the borrower claims he had been denied access to the documents on the grounds of confidentiality or relevance and told he would have to fork out the cost of extracting the info. This could easily have produced a bill running into thousands of dollars by the time a solicitor spent some 20 hours poring over records, weeding out the relevant transaction information and photocopying it Constantine now has been to the Federal Court three times to argue for greater access to vital documents relating to his loan during discovery. It is proving to be an extensive and long drawn-out exercise. Yesterday, counsel for Elders, Tony Bannon, agreed, in a compromise, to hand over extracts of computer printouts of transactions relating to Constantine's loan and its management at Elders' expense. As well as computer printouts the extracts will include diary entries relating to the transactions, dealings outlined in the "switch contact sheets and personnel records on those who dealt with Constantine's loan.

Constantine's barrister, Peter Tomasetti, submitted in court yesterday the dealings appeared to be so complicated that he and his instructing solicitor found it difficult to understand fully the significance of the documents without his client's assistance. Mr Williams "All we have done is inform the minister there has been a change of control." Panfida proposal for dual accounts Blast from the past OB McKernan, a prominent name from the halcyon days when local entrepre and treasury division. The move to restructure Elders Finance has been hastened by its recent credit downgrading by Australian Ratings. Mr Jarrett said Roach and Co, mainly a private client broker, was most likely to merge with at least one other broker whose strength was also in private client business, but it was not out of the question that the firm could tie up with an institutional broker. Mr Jarrett denied rumours that senior Roach executives were planning a management buyout of the stockbroking operations.

However, it is believed the Roach executives are considering several other alternatives. It was also rumored that Elders was talking with Mcintosh Ham-son Hoare Govett (which has had strong links with Elders in the past) about a possible tie up. But Mcintosh executive chairman Mr John Mcintosh said last night: "It's news to me." He agreed that people had portrayed such a merger as logical because of the two firms close relationship with Elders. Roach chairman Mr Ian Roach would not speculate on Elders plans for the firm. JOHN SEVIOR Raider" Petricevic, is perusing an attempt to extract large amounts of cash from its former leader.

The one-time golden boy is facing the prospect of having to fork out SNZ10.4 million to his former company for partly paid shares that he and other directors took up in 1986 with shareholder approval. For a while, it was an extremely lucrative deal for the incumbent directors. But it all went sour after the crash two years ago when the partly paid holders faced a large deficit on the transaction. The shares were paid to lc but last December the reconstructed board decided to call in the outstanding S3.49 a share. The company received payment or commercial agreement with all the participants except Rod who has yet to come up with any cash.

New chief executive Mark Chennells has decided to pursue the matter through the courts and a hearing on the matter is expected early next year. effectively be considered as an asset for the purposes of calculating the borrowing limit, whether or not it appeared as such in the consolidated balance sheet of the group The issue would appear to be of some urgency because Panfida is refinancing its US takeover of the Majik Market chain of stores. The company has said that it hoped to have a new facility in place during 1989, but conditions in the US debt markets had made negotiations difficult. It said that, while it had been believed satisfactory arrangements would be made, a reorganisation of part of the financial structure of the US businesses could be needed. which are determined by the level of assets.

The novel approach being proposed by Panfida directors is to allow them the choice of eliminating acquisition goodwill from the accounts which are presented to shareholders, but retain the item for the purpose of calculating banking restrictions. It is a significant move because in the 1988-89 year Panfida incurred goodwill on the acquisition of retail stores totalling 125.7 mfllion pounds (SA251.4 million). This accounted for 31 per cent of Panfida's total asset base. If directors had been able to write off this sum, shareholders funds would have been transformed from 97.3 million pounds to a deficit of 28.4 million pounds. Such a move would have had a major impact on the amount of borrowings the group could support.

Panfida had net borrowings of 256.6 million pounds at its latest June 30 balance date. Mr Gazal would say only that the move was "not saying that goodwill write-offs had been allowed in Australia up until recently. He said the changes simply would give directors the discretion as to whether goodwill should be. wiped from the accounts. Directors note, in the notice of meeting, that the articles would be "amended so that the goodwill arising upon any acquisition by a member of the group should By ALAN DEANS Investment Editor Shareholders in Mr Sam Gazal's retail and property investment company, Panfida Group Pic, next week will be asked to approve a controversial idea that will allow the presentation of differing sets of accounts.

The notice of meeting details alterations to the articles of association which would give increased flexibility on the level of borrowings. This would be done by allowing Panfida to write off the goodwill which it incurs through acquisitions, a practice which the company says is allowed in the UK. The problem encountered by this move is that it would affect the group's borrowing limits, neurs ran ragged through the Honkers casino, has popped up in Australia with probably the most fabled of all Antipodean bizoids, Bruce Judge. The spindly McKernan, for many years Bain and Co resident partner in the colony, is working with Bruce on the many intricate plays that Ariadne founder has immersed himself in. Bruce was full of his praise of Bob when CBD quizzed him about the alliance this week.

"Bob's a very good operator, a top man and he knows a lot of people," Judge waxed lyrically. "What's he doing with you Bruce?" CBD quizzed. FAI holders hear of 'traumatic' year BUSINESS BRIEFS (This notice appears as a matter of record only) Annual Results 1989 Simsmetal Ltd, a unit of Elders Resources NZFP, has purchased all the assets and businesses of liquid waste collection company All Clean Sullage Pty Ltd for an undisclosed price. Simsmetal chief executive Mr John Crabb said the purchase would be integrated into Simsmetal's existing waste management operations in NSW. Lord Hanson banks the Consgold booty LONDON: The spree Lord Hanson had been expected to enjoy winding up the assets of Consolidated Gold Fields (CGF) became more palpable yesterday, as he banked 670 million pounds (SA1.35 billion) of proceeds on the sale of two of its peripheral assets.

The sale of ARC's US building products businesses to CSR and residual gold mining properties in South Africa brought his post takeover plunder to more than 1 billion pounds. The sales already have recouped him almost one-third of the 3.3 billion cash (plus about 500 million pounds in long-term equity) Hanson Pic spent on CGF. And he has yet to deal with either its premium quality gold assets or its coveted ARC aggregates business in the UK. Estimates of the break-up value of CGF when it surrendered to Hanson in August attributed values of up to 3.2 billion pounds on its Goldfields Mining and strategic stakes in Newmont Mining and Australia's Renison Goldfields. The gold price has appreciated 13 per cent since the takeover, suggesting CGFs portfolio will sell at rich prices.

GIDEON HAIGH Increase over 1988 Profit before tax 107 24 Profit after tax 73 49 Balance sheet assets 1079.9 5 9. Shareholders funds 54.3 1 3 Sm. Profit After Tax Sm. Assets By CATRIONA BOOTH and BEN POTTER FAI Insurances shareholders were cautioned yesterday that the company's earnings would be hurt this year by the $20 million write-off of its investment in Qintex group. In his first annual meeting as chief executive, Mr Rodney Adler said that what was shaping up to be a record year would be reduced by the loss taken on board in the first half.

Mr Adler described the past year as referring to FAI's losses on the equity market, heavy floods on the east coast of Australia, and its exposure to troubled companies such as Bond Corporation. FAI's $563 million exposure to Bond and its $62 million exposure to Qintex have prompted Australian Ratings to down- financial profile under Mr Adler. It said FAI was concentrating on its core insurance operations, had cut its equity portfolio by $450 million and had rationalised its stockbroking arm. But it said the exposure to Bond was an unduly high risk to one group, being 1 13 per cent of its equity base including goodwill of $537 million, and while FAI's security for the exposure appeared sound, the possibility of a loss could not be ignored. Mr Adler did not reveal the downgrading to shareholders yesterday.

He foreshadowed a $100 million underwriting agreement struck by FAI's broking arm, Pembroke Securities, with a local group, later disclosed as Premier Investments. All resolutions were passed, including the introduction of a share buyback scheme. Mr Adler foreshadowed $100 million agreement. grade its long-term debt rating one notch from BBB to BBB-. In a report last week, the agency noted the improvement in FAI's overall iioo 10 S1 i 880 8,.

Trafalgar Mining NL has added to last week's purchase of a tantalite deposit by buying a suite of small gold resources at Higgins-ville, near Kalgoorlie in Western Australia, for $1.85 million. The company said the purchases totalled 562,000 tonnes of ore grading 2.9 grams a tonne. Trafalgar last week announced the acquisition of the Bald Hill tantalite prospect, also in WA, from Gwa-lia Minerals NL for $2.44 million. M3 440 3 frt I I jz 9 i --r tit 1 1 rrzs ULTIMO PROJECT TEAM 220 WESTPAC INDICATOR RATES FOR CONSUMER LENDING Home Loan Rate 17.00 p.a. (effective 2689) mm 8t 87 8b 87 88 DELAYED SETTLEMENT 5 STOREY INDUSTRIAL CORPORATE LENDING BUILDING Excellent city-fnnge location High profile island sue Investment Property Loan Base Rate 19.25 p.a.

(effective 27989) 01 55m (approx) frontage to busy Pyrmont Bridge Rd. Site area: 1.461sqm (approx) EXPRESSIONS OF INTEREST CHILD CARE CENTRE The Australian Broadcasting Corporation is presently constructing a new headquarters for ABC Radio and the Sydney Symphony Orchestra in Harris Street, Ultimo. Included in this development is a40-plaeeChild Care Centre (total area 540 sq. Submissions are now sought from interested organisationsgroups for the establishment and running of the Centre. Details of professional involvement in child care, as well as experience and funding, should be included.

The closing time for submission will be 3 p.m. on Friday, December and should be marked "Child Care Centre, Ultimo," care of Mr L. Arthur, Controller of Property, and lodged in the tender box on the 1st Floor of 150 William Street, East Sydney. Further details can be obtained from TRICIA SALI BA, on (02) 356 5403. Q.B.A.

7.305sqm (approx) CORPORATE ADVISORY SERVICES TREASURYMONEY MARKET MORTGAGE BANKING Bill Acceptance Corporation Limited Mount Isa Mines Ltd will lower its copper prices by $50 to $3,450 a tonne for cathodes and $50 to $3,670 per tonne for standard rods effective November 24. Moody's Investor Service said default rates of rated issuers of commercial paper in the US and European markets were running three to 1 1 timers higher than default rates since 1972. Moodys said it believed default rates could continue at above average levels for some time, citing investors' increased appetite for lower-quality commercial paper investments. itu'rn asu is en Westpac Equity Access Rate 19.25 p.a. (effective 27989) Full details of terms and conditions are available on application.

AUCTION DATE: 2pm MONDAY DECEMBER 11, 1989 CONTACT: KIM CLARKSON INDUSTRIAL AGENCY Richard Ellis TM NAB House, 255 George Street, Sydney 251-3333 ooooooaxxxxxxxnooooxox) Westpac Banking Corporation Westpac Savings Bank Limited LS08V89 MI ROlfACSMII 2411.