Ashok Jacob's Packer-backed funds management business, Ellerston Capital, has thrown another lazy $25 million at Treasury Wine Estates shares. Photo: Jim Rice
METALLIC nasties recycler HydroMet Corporation can expect public confirmation today that its former Chinese benefactor, Chunxing Group, has triggered a takeover by selling out to New Zealand investor Simon Henry.
Henry, who now owns 25 per cent of HydroMet, yesterday did something rarely seen - he made a 4.8¢-a-share takeover offer for a listed company in his own name, rather than through a corporate entity.
That Henry's offer emerged before the market, and Chunxing's sale of its stock was done by lunchtime, makes Insider ponder the old ''chicken and egg'' question - did the offer trigger the desire to sell, or did the desire to sell trigger the offer?
Because Henry already owned 16.6 per cent of HydroMet, he could not legally buy Chunxing's 8.3 per cent unless he already had an offer on the table. Insider thinks it highly unlikely that a company such as Chunxing would decide within two hours to accept such a bid for its $2.4 million stake, which suggests that its mind was made up before yesterday.
By the same token, Henry would not have woken up in his Sydney hotel room yesterday morning and decided to churn out a 39-page takeover offer document. These things take time.
The Chinese group took a 15 per cent placement in HydroMet almost exactly three years ago, at 6¢ a share, in a deal that gave it a board seat and the Australian company ''a new and exciting partnership with one of the world's leading used lead acid battery recycling companies''.
Clearly, the partnership had become less exciting if Chunxing is happy to take a 20 per cent loss on its investment. Chunxing's founder, Yang Chun Ming, quit the HydroMet board in early December, although he did deputise another of his executives, Jeffrey Chen, to the position.
Insider understands that Chen's resignation was to be tabled at a HydroMet board meeting late yesterday afternoon, although the company's executive chairman and managing director, Lakshman Jayaweera, said before the meeting he could not confirm that or the share sale because the company had not been officially informed.
Jayaweera took on the executive role last year after the long-time managing director resigned. In November, he also tried to engineer HydroMet spending $1.4 million to gain control of PGM Refiners, a company at least 45 per cent controlled by the Jayaweera family.
HydroMet did disclose at the outset some information about the Jayaweera interests in PGM, although subsequent announcements did not repeat or expand on it. Fortunately, PGM tidied up its records with the Australian Securities and Investments Commission a week before the deal was unveiled, clarifying issues to several shareholders beyond the Jayaweeras, backdated to 2009.
The acquisition needed shareholder approval, but fell over in February because ''conditions precedent'' had not been fulfilled. HydroMet also said that PGM refused to waive any of those conditions, or extend the timing - clearly demonstrating independent behaviour by the two companies' boards.
A couple of days later, former investment banker Morgan Parker joined the HydroMet board after his family's Sell & Parker recycling company took a strategic placement, buying 76 million HydroMet shares at 3.85¢ each.
Insider had the impression that the board is counting his group as a supporter if it turns into a battle with Henry.
While Henry has indicated his interest in a board seat, that would be difficult to do while he is bidding for the company.
Top up on good wine
ASHOK Jacob's Packer-backed funds management business, Ellerston Capital, has thrown another lazy $25 million at Treasury Wine Estates shares, topping its holding up to just over 6 per cent.
Ellerston, which is partly owned by James Packer's Consolidated Press but also manages funds for a host of clients of Jacob, revealed its hand as a substantial holder in Treasury Wine in late February.
Treasury, the non-beer spinout from the dearly departed Foster's Brewing Group, has been an excellent punt for Ellerston.
It has run from $3.40 at the end of January to $4.44 on yesterday's close - a 30 per cent appreciation in 12 weeks, which becomes even nicer when you annualise it.
The back of Insider's envelope suggests that the Ellerston stake prior to the latest buying is showing at least a $30 million paper gain - more than enough to fund the additional money thrown in since then. Maybe it is true what they say about fine wines appreciating in value.
Once upon a time people used to say that you should sell when Kerry Packer sells, and buy when he buys, and never get caught on the other side. With James mopping up more stock in his Crown casino group, its rival Echo Entertainment, and now Treasury Wine - maybe there is a sign there for the punters.
Small fry an ASIC big fish
GREG Medcraft's retrained corporate watchdog has, largely, been sniffing and biting in the right places, but just occasionally its bark is worse than its bite.
Take this week's announcement of the sentencing of Perth man Peter Robin Hickey for stealing $230,000 from investors some seven years ago. Insider has no issue with Hickey's charging or conviction - although it would be nice to see the wheels of justice shift up a pace - but Belinda Gibson, Medcraft's deputy at the Australian Securities and Investments Commission, should perhaps save her rhetorical flourishes for bigger victories.
''ASIC expects directors, as key gatekeepers of the financial system, to act honestly and not use their position to advantage themselves. When directors fail to uphold their responsibilities, we will act. We are committed to tracking down and punishing wrongdoers and deterring further misconduct,'' Gibson thundered. It made Insider wonder whether ASIC had impounded a local Bernie Madoff.
Far from it. Hickey's tiny companies and theft amounted to about two-thirds of the average home mortgage, and his ''scam'' appears to have been, thankfully, unsuccessful.