Aggressive cost-cutting and job losses have already begun at Christine Holgate’s Team Global Express in the wake of its ugly financial losses posted this week.
Private equity overseer Allegro Funds and its chair Adrian Loader clearly don’t have much stomach for an 8000-strong workforce; he and the board have been banging the table for months calling for deeper cuts and redundancies at the logistics firm.
Long-term adviser Accenture is in the house trying to figure out ways to kick the TGE workforce into better shape, mainly by removing them.
Last week a substantial portion of TGE’s sales team was made redundant, bringing the total number of staff exits in recent months to almost 50.
That number is certain to climb, and how could it not? Cost cutting is a machine that runs on bodies, with Margin Call learning that practically every business function at TGE has been ordered to find savings of a gargantuan size, in the millions, which everyone knows is unachievable without lay-offs. TGE declined to comment on that.
Company accounts for the year ended March 31 reported a loss of $190m, a number far greater than the $149m deficit recorded for the same period a year earlier.
These might be the trimmings we need to expect from Loader and the Allegro crew as they size up the company for a potential sale.
Then again, Scyne Partners – the spin-off consultancy of PwC Australia – is also in the midst of cutting into its fat. The business, another one owned by Allegro, announced last week that some 90 jobs were heading for the bin, including 10 belonging to its managing directors.
Shareholder nosedive
Pity the retail shareholders who bought Regional Express shares from May 9. Not because the share price has tanked ever since, but because that’s the date EY was engaged by Rex to undertake a “limited scope independent review of the business”, as spokesman Shane Allison confirmed to Margin Call.
Somehow, at some point, EY then seamlessly swapped hats and accepted Rex’s appointment as administrator.
“More recently,” Allison said, without naming a date, “we were engaged to support with undertaking contingency planning for the possible appointment of an administrator … including key elements of communications strategy with key stakeholders and to work with management to establish operational dependencies”.
Rex never disclosed a word of this to hapless shareholders, or the cameo appearance of a Deloitte turnaround team to advise the key partners at Pacific Asia Group and Westpac.
Of concern, too, is whether EY’s metamorphosis might constitute a conflict of interest.
For anyone bored enough to read the Corporations Act, there’s a section that definitely requires external administrators to be independent of the beleaguered company and directors receiving their assistance. Technically, EY could have a problem if it was already in the tent providing advice – and ASIC has been known to pursue wrinkles of this kind, even if the penalty ends up being nothing more than a smack with a feather duster.
EY, of course, thinks it’s done nothing wrong. “We do not consider that such advice results in a conflict or an impediment to accepting the appointment,” said Allison, who confirmed that EY was paid up front for its advisory role; and this was probably while its reps were learning that the company was heading for administration.
Smacks of a preferential payment, no? Joke’s on the shareholder, however. EY won’t have much trouble clawing it back.
Keeping up with Jones
Assistant Treasurer Stephen Jones doesn’t have any qualms about his perceived brownnosing of the nation’s banking sector, as alleged by Margin Call in a column published on Wednesday.
Jones’s servility on Consumer Data Right policy is an open secret in Canberra. It’s despised by the banks and their lobbying arm, the Australian Banking Association, has been desperate to kill it off since Labor took government in 2022.
Jones is all but certain to reveal in a speech next week that a planned expansion of that policy won’t be happening this year, an outright victory for the banks that’s probably sweeter than the 1993 election and 14 John Hewson birthday cakes all at once – without GST.
So, with that genuflecting in mind, Jones took to the stage at the National Press Club on Wednesday and gave the warmest of public welcomes to ABA chief executive Anna Bligh, her lieutenants seated in the audience at the NPC’s main table, among them ABA corporate affairs chief Fiona Landis, right next to Jones’s chief of staff Belinda Robertson. There’s barely any daylight between their offices anyway and everyone knows it. We really weren’t kidding when we said the ABA all but writes Jones’s speaking notes on CDR policy.
Westpac sponsored the event, of course, and representatives from all the major banks were in attendance. Jones, on the attack against scammers, spoke with gusto in support of the banks, even defending them at times; but that really shouldn’t surprise anyone any more.
Super snooper
A curiosity out of the Federal Court where lawyers acting for Super Retail Group have been working to suppress documents ahead of a looming battle with the company’s sacked chief legal officer, Rebecca Farrell.
Justice John Halley remarked during Wednesday’s hearing that journalists had applied for access to Farrell’s statement of claim, which is par for the course, but then turned a few heads by revealing that an “investor consultancy” had been trying to get at the documents.
A fund manager trying to short the stock? Who was this mysterious snoop? Those in the court were left none the wiser, with Halley ruling that the statement of claim would be kept confidential for the moment.
Legal action looming for Chris Ellison’s Mineral Resources
Like a beachball trapped underwater, the shabby treatment of some women at MinRes does keep finding a way to rise to the surface.
Unions chief inflamed on inflation, but not so super on fees
ACTU chief Sally McManus has taken aim at the banks and insurance companies for pushing up inflation but has been strangely quiet about rising fees in industry super funds.