Brickworks structure to remain steady
HOPES that Brickworks would buckle quickly to investor pressure for a restructure have been rebuffed, with the company's blocking cross-shareholding with Washington H. Soul Pattinson to remain.
Even so, Brickworks director Robert Webster said the door was open to discussing future options for the group.
Institutional investor Perpetual, which has a 12 per cent stake in Brickworks, has been pressing the board to review its long-standing cross shareholding with Soul Pattinson, to help improve shareholder returns.
Soul Pattinson has a 44.5 per ent stake in Brickworks, which in turn holds 42.7 per cent of Soul Pattinson. Perpetual is also a large investor in Soul Pattinson, with a 12.2 per cent stake.
On Monday, Melbourne banker Mark Carnegie took an option over Perpetual's holding in Soul Pattinson as dissident investors stepped up efforts to force a restructure. At the annual meeting of Brickworks, shareholders were told independent directors led by Mr Webster had reviewed a range of options, such as an in specie distribution of the company's holding in Soul Pattinson to shareholders, but decided to maintain the present structure.
''There is no realistic restructure within the control of Brickworks that will unequivocally improve shareholder value,'' Mr Webster said, while some options ''would actually reduce value for Brickworks''.
''This includes crystallising unrealised taxes that will unlikely be payable under the current structure.
''The existing structure has delivered strong shareholder returns compared to the All Ordinaries Accumulation Index. In the current economic environment, there is more upside for Brickworks shareholders from focusing on improving the performance of our core businesses.''
Following questions from Matt Williams, a fund manager with Perpetual, Mr Webster said: ''The door's not shut … and [it] will remain open.''
Mr Williams said this was the first time ''there has been a glimmer of movement … of the independent directors in assessing potential options for the company and talking about those options''. The review had only looked at any restructure ''within the control of Brickworks'', Mr Webster said.
A broader review of the cross holdings between Brickworks and Soul Pattinson would need to be undertaken if change was to occur.
Mr Webster refused to release publicly the advice received on the restructuring options, saying it was ''commercial in confidence''.
Brickworks' key building products division was expected to turn in a flat performance again this financial year.