The rubber has hit the road at the Christine Holgate-run Team Global Express, with an interest holiday on the transport group’s $133m bank debt now over.
The financial reality has hit the transport group’s private equity owner, Allegro, as it seeks to turn around the company’s $95m bottom-line loss of last year. The interest on TGE’s asset-backed loan must be paid at a hefty rate of 11.5 per cent, which will drag about a further $15m a year from the company’s already-in-the-red bottom line.
The fresh expense for Allegro comes as the firm’s principals, led by founding partner Adrian Loader, seek to nut out the details of an announced deal to buy PwC Australia’s embattled government business for $1.
The PwC buy won’t need Allegro’s cash as equity, but will require the injection of significant seed funding to establish what will essentially be the consultancy start-up.
At TGE no interest on its $133.3m in syndicated bank debt had been payable through to April this year, but banks will now have their hands out to former Aussie Post boss Holgate for the cost.
The debt is secured by a fixed charge over certain TGE assets, which would see the lenders rank first in the event of a corporate failure, as unfolded with key lenders in the collapse earlier this year of Scott’s Refrigerated Logistics, owned by Anchorage Capital Partners.
TGE’s interest payments are in addition to related party debt that the company must also service. Allegro has $49m in convertible notes on which interest has been payable since it took control in August 2021.
In the shorter 2022 financial year, TGE made a net loss of $94.9m on revenue of $1.5bn. Finance costs were already at $57m. Those accounts were audited by KPMG.
How much Allegro has free to inject into a spun-off PwC outfit remains to be seen.
Hrdlicka back
Virgin Australia boss Jayne Hrdlicka is back at work running the Brisbane-based airline following a short period of bereavement leave after the death of her husband Jason Gaudin in May.
Margin Call hears that Hrdlicka, who is also Tennis Australia chair, has had her feet back under the desk for several weeks, overseeing a $730m capital return to the airline’s shareholders led by Bain, which owns 93 per cent. Another 5 per cent is in the hands of the Virgin Group, while QIC has the rest.
The capital return, which was mooted in May and officially reported to the corporate regulator several days ago, saw the trio essentially recoup the cash they injected to buy Virgin out of administration after it collapsed in late 2020. Bain was paid back $678.9m, Virgin Group $36.5m and QIC $14.6m.
The payments had been a milestone on the pathway towards a potential float of Virgin in June/July this year, but that timetable was shelved amid the unfolding personal circumstances of the CEO.
Local roadshow meetings with fundies that were cancelled in April have not yet been rescheduled in a hoped for a late second-half market offering.
Bubs mess spreads
Just when you thought Bubs couldn’t get any worse, its pugnacious chair Katrina Rathie drags Joe Hockey into the fight to save her position.
Rathie, a lawyer by trade, is attempting to fend off a board spill from a group of dissident shareholders led by sacked chief executive Kristy Carr and former executive chairman Dennis Lin.
Rathie engaged corporate undertaker McGrathNicol to comb through executive expenses, finding that Lin and Carr spent an eye-watering $1.4m over a 17-month period. It’s all sensational stuff, nights at the Ritz Carlton and Mandarin Oriental, Armani clothes, and a night out at Ocean 12 – a cigar, whisky and karaoke bar atop Crown Melbourne.
McGrathNicol also found that a $US900,000 ($1.35m) bonus was paid to Bondi Partners, a firm led by former treasurer and US ambassador Hockey. Hockey’s outfit helped Bubs obtain FDA approval last year – a move that added $130m to Bubs’ market value before the company lost it all and engaged in bloody infighting.
It’s all Greek, or more accurately Chinese, to another corporate adviser Rathie has engaged – David Williams – known not only for his legendary deal making, but also generous hospitality at Melbourne’s Flower Drum.
Williams reckons the public biffo between the warring factions is essentially a moot point. In his mind, the battle to control Bubs is relatively simple – who is best placed to steer the company’s China strategy.
In the one corner there’s Steven Lin – a Bubs non-executive director who represents the company’s biggest shareholder, Alibaba-backed C2 Capital. In the other corner, there’s Dennis Lin (former executive chair, but no relation), who led a project to make infant formula in China for the Chinese market via a partnership with regional dairy operator Heilongjiang Ubeite Dairy Group (HUG).
Margin Call can reveal other Australian and New Zealand infant formula companies have kicked the tyres at HUG but found it was not for them. But Bubs was desperate to piggyback on HUG’s China registration to enter China’s general retail trade, which represents about 80 per cent of the China infant formula market. Understandable given the chances of Bubs getting Beijing to approve its factory in Dandenong are next to nothing.
“It’s about stopping the value rot,” Williams says, noting Bubs’ share price, which has plummeted from $1.42 to 19c in the past four years.
“And then about India and the US and about Indonesia. China is important but let’s not have all our eggs in one basket.”
Real life real estate
While the Greens’ housing spokesman Max Chandler-Mather has been spending his time getting right up Anthony Albanese’s nose on housing policy, a lack of affordability and rent controls, the leftie member for Griffith’s teammates have been getting on with policies much closer to home.
Take Mather-Chandler’s upper house colleague Jordon Steele-John, who’s launched himself into the reality of home ownership.
The senator for WA, who’s been in the parliament since 2017, has just bought a house in Baldivis, a semirural residential suburb 46km south of Perth.
While Chandler-Mather, 31, whose disclosed assets comprise just savings and superannuation (he’s also still got a university debt to pay off), talks the talk, Steele-John, 28, a couple of weeks ago handed over almost $700,000 for a modern, four-bedroom home. He’s braved a mortgage too, with MyState Bank based out of Tassie.
Perhaps he can report back to colleagues what life’s like in the real world.
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