The incestuous nature of the Tasmanian corporate landscape was further laid bare this week by a revolt among a dissident group of investors in the state’s flagship example of export innovation and “green” credentials — infant formula company Bellamy’s — which includes Ms Cameron and looks to have roped in most of the island’s business elite.
They live in the same suburbs, sit on the same boards, dine at the same restaurants and just can’t help bumping into each other, whether it’s in the boardroom or at a social gathering, with battles such as the one taking place at Bellamy’s pitting neighbour against neighbour.
The Tasmanian “mafia” is probably too harsh a term — this is a lush, tranquil island, after all — but pull one string and the whole fabric of Tasmania’s business and investment community follows.
“It is true that everybody has only got two degrees of separation in Tasmania,’’ Ms Cameron told The Weekend Australian. “And that works both ways, it can be to your detriment or it can be to your advantage. So you just have to be aware of that and try to minimise the disadvantage side of it and use the advantage side.
“So for example the team at the Bellamy’s office, as I understand it, are very committed to the company with a really good culture and that’s one of the advantages of being a small community.
“But on the other hand when tough decisions have to be made that makes it a lot harder. I think we all just need to be aware of that and have it out in the open.’’
Bellamy’s is a classic case of this two degrees of separation problem. Chairman Rob Woolley is also chairman of the ASX-listed TasFoods, whose executive director of finance is Roger McBain. Mr McBain is the husband of Laura McBain, the CEO of Bellamy’s. If that’s not close enough, TasFoods’ chief operating officer is Tom Woolley, son of Rob.
But, the links go even deeper. Among Ms Cameron’s rebel followers are BRW rich lister and local Tasmanian tourism and property investor Bruce Neill, and she is being helped by her adviser, stockbroker Hugh Robertson. Mr Robertson sits on the TasFoods board and helped reconstruct the company from a bombed-out technology business. He also helped float Bellamy’s.
Meanwhile, shareholders remain in the dark, with Bellamy’s stock frozen in a trading halt. The trading halt ends next Friday but it will mean investors will have been unable to trade for almost six weeks.
Wrangling over an onerous take-or-pay supply contract with dairy giant Fonterra, which runs until November 2020, is one of the key reasons for Bellamy’s shares being suspended from trading since the week before Christmas.
It is understood Bellamy’s exposure on the contract is significantly higher than the $27.5 million previously speculated. While talks on renegotiating the Fonterra deal are well advanced, they are yet to be concluded.
Ms McBain is said to have always been close to Judith Swales, who is now Fonterra’s Chief Operating Officer (COO) Velocity and Innovation. She was previously Fonterra Australia chief.
The Bellamy’s board is said to be concerned about why the Fonterra deal, agreed in November 2015, was struck in apparent haste and on such favourable terms to the New Zealand co-operative.
The deal also damaged the longstanding relationship between Bellamy’s and Bega Cheese.
There is also speculation Ms McBain was considering striking another long-term supply deal with another player in the dairy industry on unfavourable terms to the company but was advised by one of her executives against proceeding with the contract.
It is unknown if that deal was considered by the board. Ms Cameron revealed on Thursday that one of the reasons for the move by the dissidents was that they got wind the board was moving to replace Ms McBain following the company’s shock profit downgrade in December that saw the shares plunge nearly 50 per cent.
She wants Ms McBain to stay in her role. There was further speculation yesterday that Mr Woolley was considering his position after Ms Cameron revealed she had heard about the move by the board to replace Ms McBain from Mr Woolley himself.
It is understood Mr Woolley has twice backed in-principle the push by the independent directors to remove Ms McBain following the December downgrade, but subsequently changed his mind, frustrating fellow directors.
He then sided with the directors this week in opposing the move by Black Prince Private Foundation, Bellamy’s biggest shareholder with just under 15 per cent, and Ms Cameron to roll the board.
It is uncertain whether his change of heart on Ms McBain followed a discussion with Ms Cameron, who Bellamy’s has always treated as a major investor in the company despite her declaration that she has no association with the Singapore-based Black Prince.
Mr Woolley is close to Ms McBain but revelations he supported the board push against her may make her position untenable if he remains in the chair.
“These relationships are perfect on the way up, but they are an absolute nightmare on the way down,’’ said one observer familiar with all the players yesterday.
Another said Mr Woolley would need to answer to the board what information he provided privately to Ms Cameron about Ms McBain’s position and on the financial position of the company.
Ms Cameron said Bellamy’s was not in danger of running out of cash and had not touched a banking facility with HSBC worth about $40m. She has said Mr Woolley would only remain in his role in a “temporary capacity” until the dissident group found an appropriate chairman.
Some have speculated Bellamy’s director Launa Inman, who has led the rearguard action by directors against the dissidents, could step into the role if Mr Woolley chose to step aside and the board resolved to continue to fight the Black Prince-led coup.
Mr Woolley has also been criticised for selling a substantial portion of his Bellamy’s shareholding between September 2015 and August last year at prices well above the current level.
Ms Cameron says she is more focused on the fact that the directors have no skin in the game.
“I’m concerned about the non-executive directors, that they hold very few shares in the company, I think it’s something like 70,000 between them compared to 35 million shares our group holds,’’ Ms Cameron said. “It always helps to have the board members’ interests aligned with shareholders. I would be totally aligned with all shareholders because I am one.’’
The latest annual report shows Ms Inman holds 26,020 shares and Patricia Mann 4,000 shares. The two other directors, Charles Sitch and Michael Wadley, have ‘nil’ next to their names.
Then there is the problem of the class action suits facing Bellamy’s being planned by Slater & Gordon and Maurice Blackburn.
All the more reason for the Bellamy’s directors to step aside, argues Ms Cameron. “They are facing a couple of class action lawsuits and if I was in their shoes I would be extremely concerned about that. I’m concerned the board will be distracted.’’
Source: TheAustralian
Link: http://www.theaustralian.com.au/business/companies/bellamys-coup-shines-light-on-tasmanias-corporate-world/news-story/4cc69ffbb7cae49834c9ebc220fe0092