Ousted Federation chief Steven Sewell takes break

Steven Sewell is planning a break in ­Europe following this week’s sudden ousting as chief of Federation Centres.

Steven Sewell is the CEO of Federation Centres.

Steven Sewell is planning to embark on an overseas break to ­Europe following this week’s sudden ousting as chief executive of the $22 billion Federation Centres retail empire, sources close to the executive say.

Despite the dramatic set of events this week, it is understood Mr Sewell remains in good spirits, and is not planning to take legal action against his former employer, and is “pleased” to clear out of the shopping centre owner.

Mr Sewell was told to depart from the company on Monday. His exit followed a fiery board meeting on Thursday last week.

While some fund managers have demanded an explanation for the events, one of the company’s biggest shareholders, the influential industry fund Uni­Super, has indicated it still supported the Federation board.

It is understood Mr Sewell had been preparing to present his company strategy to the board after the Thursday meeting, but before that could happen he was told he was being replaced by Angus McNaughton.

“He is going to take a break and go overseas and not rush anything,” said one source close to Mr Sewell.

The source said Mr Sewell still needed his release to be formalised, and the terms of his escrowed stock finalised.

It is understood the Federation Centre directors were not satisfied with his plan to implement the $12bn merger with Novion, and on details surrounding hedging and financing arrangements within the company.

Mr Sewell declined to comment yesterday.

However, it is understood that billionaire John Gandel called for Mr Sewell’s departure following a profile article on Mr Sewell in The Weekend Australian on July 11.

Mr Gandel had not been consulted about the interview and it is understood Mr Gandel felt the interview had breached his privacy.

Mr Gandel declined to comment yesterday.

The under-pressure Federation board appears to be shoring up its position after major investor UniSuper indicated its support. At the same time a growing push among investors to spill the board has been quashed.

The Australian revealed online yesterday that UniSuper would not support any move against the board, while high-profile fund manager Winston Sammut also refused to lead a shareholder rebellion to oust Federation chairman Peter Hay.

The Federation board met again yesterday.

The public support is expected to ease the heat the board has faced since its move on the chief executive.

Shares in the company — which has a stake in 100 malls across Australia, including a half-share in Melbourne’s Chadstone Shopping Centre and Sydney’s Chatswood Chase — had a much-needed boost after sliding 6.5 per cent on Monday. Shares ended up 5c yesterday at $2.86.

Even so, there were tensions in the recently merged company. One source close to the Federation board said former chief fin­ancial officer Tom Honan was ousted shortly after the merger was ­approved in May because they felt he “wouldn’t listen to people ­particularly on the Novion side of things”.

“He was simply a victim of politics,” the source said.

The source noted that the board had not complained about Mr Sewell while the merger was being implemented. Mr Gandel was also an early supporter of Mr Sewell, the source added.

“There has been a real clash of culture between the two, the Novion side is fairly conservative, the Federation side was more enterprising,” the source said.

“The board clearly wanted their own men in these positions.” Prior to this year’s merger Mr Sewell was chief of Federation while Mr McNaughton headed up Novion.

Unisuper chief investment officer John Pearce said in a statement yesterday that he was not privy to the decision made by the Federation board to replace Steven Sewell. But he stressed it had “full confidence” in the judgment of the directors and emphasised the “decision was unanimous”.

He added that superannuation fund would not support of any action that would destabilise the board. UniSuper has a 7.61 per cent stake in the company, the single biggest behind Mr Gandel’s 17 per cent stake.

Meanwhile, fund manager Mr Sammut confirmed he was approached by other investors to front a public campaign to unseat Mr Hay.

But he yesterday decided to decline the invitation, stressing that it was time that other institutional investors “stepped up and took a more active role”.

A spokeswoman for Federation also denied speculation this week that Mr Gandel’s lawyer sent a letter to the board stating his displeasure with Mr Sewell’s ways.

But fund managers and analysts continue to question the board’s decision.

Resource Liquid Alternatives managing director John Snowden said he was “confused” by the executive switch.

“This is a totally different senior management team to what shareholders voted for some months ago and calls into question the modus operandi of the Federation board. It implies a significant change of strategic direction for the company that is materially different to what the market was told when the merger was approved.”

He also was also critical of the explanation offered to investors, saying it showed a lack of respect for shareholders.

Additional reporting: Gretchen Friemann, Ben Wilmot