Blue Sky Alternative Investments ditches already downgraded earnings guidance

BESIEGED Brisbane funds manager Blue Sky Alternative Investments chose yesterday’s public holiday to lob the equivalent of a hand grenade into the lounge rooms of its shareholders.

Blue Sky chairman John Kain will step down at AGM in October.

GETTING WORSE

JUST when you thought things couldn’t any worse for Blue Sky Alternative Investments, they get worse. A lot worse.

The besieged Brisbane funds manager chose a Queensland public holiday on Monday to lob the equivalent of a hand grenade into the lounge rooms of its shareholders.

In yet another stunning announcement, the company ditched entirely the earnings guidance that it had already downgraded three weeks ago.

Forecasts for fee-earning assets under management were also thrown out the window for this financial year and next.

Chairman John Kain, a corporate lawyer from South Australia, plans to fall on his sword at a sure-to-be-riotous AGM in October after 11 years in the role.

Another director, Alex McNab, gave up his spot on the board and his role as chief investment officer, effective immediately.

Tim Wilson will also leave the board but stay on as head of the company’s private equity arm.

The reshuffle widens a management shake-up which saw the departure of chief executive Rob Shand last month.

Blue Sky continued to wheel out soothing sentiments yesterday about wanting to improve transparency, accountability and good governance as it moves to “rebuild trust with stakeholders’’.

It even vowed to appoint a “chief risk officer,’’ which begs the question about why someone wasn’t already tackling this job.

Not surprisingly, the market reacted savagely to the perception that the company may still not have hit rock bottom in this horror show. Shares lost another 8 per cent yesterday to close at $2,50 — its lowest point in four years.

Astonishingly, this is the same company that raised $100 million in March from investors, who forked out $11.50 per share.

PROJECT RAINBOW

BLUE Sky’s dramatic fall from grace started in late March, when California-based short seller Glaucus Research Group alleged the company had inflated asset values and gouged investors.

Since then, Blue Sky has floundered, unable to adequately rebut the criticisms or stop the slide in its share price, which has triggered talk of potential class action lawsuits.

Indeed, it acknowledged yesterday that it had “underestimated the impact that shareholder activism could have on the business as a whole’’.

So City Beat found it rather amusing on Monday that the company referred to its latest restructuring gambit as “Project Rainbow’’.

The deliberately suggestive code name was surely no accident, since the colourful arches often emerge after storms have blotted out all that blue sky.

But, as one broker joked yesterday, in this case there may by a turd at the end of the rainbow instead of a pot of gold.

FUMING INVESTORS

THAT bearish sentiment certainly seemed to reflect the thinking of shareholders who dialled in to a teleconference yesterday with Blue Sky managing director Kim Morison.

“Investors are thoroughly frustrated. Something is drastically wrong with this company,’’ one fuming stakeholder told Morison.

“Either something is wrong with this company or the market has got you very wrong.’’

Morison could do little but respond that the market “is not necessarily able to make a good judgment’’.

Another caller asked whether Blue Sky’s latest announcement was tantamount to “a complete capitulation to Glaucus’’.

Morison, who remained remarkably calm under pressure for more than an hour, swatted the question away.

“We’ve been disappointed that the market hasn’t understood the nature of our business,’’ he responded.

Morison and his sidekicks are sure to get plenty more grief as they embark on an investor road show around the country this week.

It won’t be pretty.