Circus Oz funding under threat; outgoing Magellan chief takes healthy parting payment

Magellan's Hamish Douglass and former cheif executive Brett Cairns. Picture: Jane Dempster

While the circumstances surrounding Brett Cairns’s departure from Magellan take the focus of industry scuttlebutt, one thing that is certain at least is that the chief executive parts with quite the nest egg.

After a 14-year association with the group, the director-turned-chief exec has amassed a holding of more than 1.15 million shares in the funds management group, worth roughly $33.5m even after the company’s near-7 per cent fall on Tuesday.

Hardly what you’d call a bad innings.

Magellan's former CEO Brett Cairns. Picture: Jane Dempster/The Australian

It didn’t take long for the exec to be wiped off the Magellan website on Tuesday, after the aftermarket announcement the day before, replaced with interim chief Kirsten Morton, also likely to take Cairns’s board seat next to David Gonski and Kelly O’Dwyer at the fund’s key investee company, Barrenjoey.

However, there was one minor detail that seemingly missed the web developers’ purview, a little matter of a “note from the CEO”, signed off by the former CEO.

Along with spruiking the fund’s success and its rigorous investment processes, Cairns noted that, “above all, we are a collegiate team who firmly believe in placing the interests of our clients first”.

While Cairns’s exit may have been abrupt, his association with the firm will take longer to sever thanks to a three-month notice period under the circumstances, during which he continues to draw his salary of roughly $120,000 a month.

Those same conditions dictate that Cairns, a doctor of philosophy from the University of Sydney, is also restricted from soliciting employees and clients of Magellan for six months.

Sounds like some good time to spend at his $7.5m inner-city sub-penthouse, or more likely his secluded estate in the NSW Southern Highlands.

It’s not all bad.

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High wire act

Performance troupe Circus Oz, billed as the world’s longest-running contemporary circus company, has but weeks to hold on to its illustrious title, with key funding in jeopardy if the group can’t get its affairs in order by the end of the year.

The Melbourne-based outfit, known for its all-juggling, all-tumbling performances under a big top, have since 2018 been fielding warnings from national funding body the Australia Council over concerns of its ­viability and ability to service its debt.

In a statement to Margin Call, the Australia Council noted: “The company has been on ‘fair notice’ since 2018 due to ongoing concerns over its financial position and declining attendance.” It added that a wide range of representatives from the circus and physical theatre sector had been consulted.

Illustration: Rod Clement.

It’s not the first warning for the circus group in recent years, the company unveiling a renewed organisational strategy only five years ago after similar struggles.

Executive director Penny Miles described the group’s position as a “teeterboard” earlier this year, noting that the company welcomed the chance to be “competitively assessed”.

Most recent accounts for the group show $1.78m in JobKeeper subsidies for the year largely kept the group afloat.

Directors for the group, led by chairman Nick Yates, noted that grant income of $2.62m from the Australia Council and Creative Victoria equated to 70 per cent of total income ex-JobKeeper, the board well aware that “the company remains economically dependent on this grant revenue in order to sustain operations”.

Funding, Circus Oz noted, was only secured up until the end of this year, with grants for the following two years dependent on the outcome of the Australia Council review.

With just weeks left of the year, the clock is ticking, and by all accounts the ball is in the circus group’s court.

“The review has been provided to the board and membership of Circus Oz for their consideration and response,” the council said in its statement to Margin Call.

“The Australia Council and Creative Victoria will continue to engage very closely and collaboratively with the company on its response to the review.”

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An age-old order

The intrigue continues in the case brought by Regal Funds Management boss Phil King against Fairfax Media in the NSW Supreme Court.

Phil King a fund manager with Regal Fund Management. Jane Dempster/The Australian

Margin Call told you in recent weeks of the lengths notorious short seller King and brother Andrew were going to in order to keep the lawsuit under wraps, the latest development of which serves only to add to the mystery.

News has reached Margin Call’s desk that far from your run-of-the-mill suppression order, King and hot shot lawyer Rebekah Giles have secured a non-publication order out until 2066, “on the grounds that the order is necessary to prevent prejudice to the proper administration of justice”.

On our maths, the leading fundie will be well within Charlie Munger vintage by that point, at the ripe old age of 98.

Never can be too sure.

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Talks on merger

The process to unite prolific real estate investor David Di Pilla with billionaire retail king Brett Blundy continues this week, with parties scheduling a shareholder meeting to vote on the mega $3.2bn merger.

But neither party is taking any chances.

Buried deep in the meeting notice lodged on Tuesday, HomeCo notes an obligation to pay for all of Aventus’s external costs and expenses (up to $5m) if it can’t reach the desired 50 per cent shareholder approval.

Further, if between now and mid-May the group receives and announces a competing proposal, HomeCo has to pay a reverse reimbursement fee, set at $20.15m and $1.63m to Aventus Trustee and Aventus Company respectively.

Plenty of reasons right there to get shareholder support over the holiday break ahead of the January 24 meeting.

For what it’s worth, HomeCo did set out to shareholders what it saw as reasons for and against the merger, that it would create a leading REIT with a $4.1bn portfolio, achieve strategic value from last-mile logistics infrastructure and achieve compelling financial metrics.

On the flip side, it cited an expected NTA per unit reduction and $48m in transaction costs.

Nothing if not diplomatic.