Under-pressure sports media proprietor Craig Hutchison will hope the next set of quarterly management accounts his listed Sports Entertainment Group has been told to present to Matt Comyn’s Commonwealth Bank come the new year keeps the bankers from his door.
SEN is under serious financial pressure. It has an almost fully drawn $28m facility with CBA that expires in August and the company is already in breach of the debt’s prevailing banking covenants.
CBA has waived those requirements for September and December this year, but has retained its right to at any time call in the money, which is now considered a current liability.
On Thursday, Hutchy revealed SEG had flogged its loss-making New Zealand operations, which might give the $58m company some breathing room with Comyn in the short term.
Hutchy, a former News Corp and Nine reporter, is now required to report to the bank quarterly with historic numbers and the company’s budget, which is happening as negotiations are unfolding on renewing and extending the debt.
Taking the Kiwi drag off operating earnings will help SEG’s interest cover ratio – that is its ability to pay the interest expense on its debt, calculated by dividing operating earnings by interest expense.
The Kiwi deal also brings $NZ4m ($3.7m) cash in the door, which boosts SEG’s total assets. This helps improve its leverage ratio, which it has also busted.
A simple debt-to-equity version of this is calculated by dividing both short-term and long-term debt by total assets. The extra cash in the door helps make SEG look more financially stable.
Last year SEG as a group made a net loss of $9.3m. The FY2023 accounts stressed the company’s status as a going concern was a “material uncertainty”. The future in large part depends on what the CBA decides to do about what it’s owed.
Auditor BDO said that note “may cast significant doubt about the group’s ability to continue as a going concern”.
So there’s plenty at stake for everyone involved, not least of which is Hutchy who according to the annual report has 51.45m shares in the company, or 19.7 per cent.
That is now worth $11.6m, with the trend of momentum no longer his friend.
Besties at Beston
Beston Global Foods must be in the running for some sort of record at its annual meeting to be held on Friday, with the possibility of a fifth “strike” vote against its remuneration report looming.
The South Australian food producer has not had its remuneration report waved through by shareholders since way back in 2018, with its major shareholders in the past leading the charge in voting against the reports.
And the votes have been, shall we say, brutal, with the best two efforts in the past four years a 44.3 per cent protest vote in both 2022 and at the 2020 annual meeting (actually held in early 2021).
They were at least an improvement on the 64.9 per cent protest vote back in 2019.
This year could well turn the tide for the company, chaired by former SA Australian Institute of Company Directors head Roger Sexton and whose board also includes former Santos and Elders chair Stephen Gerlach.
While the voting intentions of the previous significant shareholders remain confidential, a $28.2m capital raising late last year and various share dealings over the course of the year are likely to have diluted the influence of previous holders unhappy with the management of the company.
Fair to say that no one is yet singing Beston’s praises however. The company is still in a battle for survival, having never turned a profit since listing in late 2015, and with a market value of just $13m.
Asset sales are planned to shore up the balance sheet, with the company successfully growing the top line in recent years, but struggling to turn that into profits.
Money to burn
The quiet life post-Qantas sees Australia’s most popular executive Alan Joyce continue to rejig his personal interests amid talk of a further $6.1m payday thanks to long-term incentive bonuses.
Joyce has now settled on his $9.25m buy of a high-rise apartment on Harrington Street in The Rocks, which is on the other half of the level that is not occupied by his existing apartment offering expansive views of Sydney Harbour.
The new property was bought by Joyce and his husband Shane Lloyd as joint tenants, with ownership of the old apartment recently also transferred into Lloyd’s name. It had previously been Joyce’s alone.
The transfer was made “without monetary consideration and a change in the manner of holding”. The couple own both dwellings outright, so there’s no mortgages to pay, but so far there is no application to the City of Sydney showing plans to amalgamate the two apartments to make one killer home in the sky.
Joyce still owns his holiday home, which he bought in 2015 for $5.25m in Palm Beach, subsequently renovated in 2017, in his own name. There’s no mortgage on that one either.
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