Kevin Gallagher could land more than $50m from Abu Dhabi takeover of Santos

Santos chief executive Kevin Gallagher. Picture: Brenton Edwards

Forget Kevin Gallagher’s $6m golden handcuffs, the Santos boss could have more than $50m riding on whether federal Treasurer Jim Chalmers decides to tick off on Abu Dhabi’s $30bn takeover for the oil and gas giant.

It’s the kind of figure that makes you wonder if the pugnacious Santos boss has taken a moment to look back on his public commentary on the federal government’s “Soviet-style” energy policy and wishes he hadn’t gone quite as hard.

Although, whatever Gallagher’s good qualities, we suspect few would number self-reflection among them.

But it’s still a very large number – depending, of course, on how the final offer from Abu Dhabi’s national oil company and private equity giant Carlyle Group pans out.

As it stands – according to Gallagher’s last director interest disclosure – the Santos boss holds around 2.2m shares in his family trust, worth around $19.3m at the $8.89 offer price.

There’s another three million share acquisition rights granted under the company’s employee equity plan, worth about $26.5m. Santos’ last annual report informs us that those rights can be converted to shares for no cost, or settled with cash if the owner prefers.

And then there’s another 285,719 “restricted” fully paid shares issued to Gallagher under Santos’ 2023 and 2024 deferred short-term incentive plan, chump-change at only $2.5m.

That’s a total of around $48.3m. A handy packet in anybody’s language.

And then there’s the so-called golden handcuffs handed out by the Santos board in 2021, when Gallagher managed to convince the company’s directors he was about to jump ship to Woodside. That’s another 847,458 share rights, worth $6m at the deemed value of $7.04 back in the day, but closer to $7.5m at the offer price.

It’s not entirely clear how many, if any, of those shares rights have already vested. Or whether they include a change of control clause that would send them Gallagher’s way if the transaction is closed before the end of the year.

Which seems unlikely, given the need for a due diligence period on Abu Dhabi’s behalf, the marathon legal documents always required in these kind of things. Not to mention the Foreign Investment Review Board process, and Chalmers’ ultimate say on the matter.

Still, any move to block the takeover would be more evidence of Soviet-style intervention, wouldn’t it?

On the other hand, it does provide Chalmers a cheeky opportunity to deal with some vexed local policy issues even if he elects not to block the transaction, as outspoken MST Marquee analyst Saul Kavonic (no fan of Gallagher) noted on Monday.

Peter Costello extracted a range of concessions from BHP when it merged with Billiton back in 2001 – mostly around the requirement for the company to remain fundamentally Australian.

But the Santos deal could also allow Chalmers to negotiate a few conditions around domestic gas supply. If not an actual reservation from Santos GLNG, then at least a mechanism to stop new owners from hoovering up every available molecule of spare local gas for export, as the company’s competitors have long accused Santos of doing.

What would that do to the offer price? Difficult to say, but if that’s what it takes to get a deal over the line, Gallagher will still be laughing all the way to the bank.

Crypto brothers to face questions

Cryptocurrency bros Dan and Will Roberts look set to face a grilling from the Canadian receivers of two failed bitcoin mining companies after failing in their latest legal bid to avoid answering questions about their business affairs.

The messy legal dispute surrounds the bankruptcy of two Canadian companies that bought computing gear using a $US100m loan from US-based crypto funder Nydig.

The companies, offshoots of the former Macquarie bankers’ Nasdaq-listed IREN, bought about 36,400 computers using Nydig’s loan and installed them in warehouses in British Columbia, where power is cheap, meaning to use them to run the complex algorithms that somehow lead to bitcoin creation.

Sadly, their purchase coincided with one of the cryptocurrency’s regular bouts of volatility and the two companies collapsed in early 2023.

Enter PwC’s Canadian insolvency division, which was horrified to learn that the loans had no recourse to the rest of IREN’s assets, and has been trying to establish a legally tangible connection ever since.

Key to this is dragging the Roberts brothers into a compulsory examination about their role in the debacle – a call they have resisted.

While Will Roberts sat down for a three-hour session with liquidators in Canada, Dan was able to resist, on the grounds that he was never a director, officer, employee or agent of the collapsed companies.

Both brothers went to Federal Court last week to argue against PwC’s latest efforts to bring them in, arguing that attempts to compel their attendance in Australia were an attempt to circumvent a parallel court case in Canada, and in any case were oppressive and an abuse of process.

Unfortunately for them, Justice Yaseen Shariff did not agree, dismissing their application to lift the summons.

“Aside from submitting that Mr William Roberts does not wish to be asked questions again, nothing by way of substance was put to demonstrate any particular oppression that would be sheeted home … by way of further examination,” Justice Shariff said in dismissing the application.

“The fact that Mr Daniel Roberts was successful, together with IREN, in resisting examination orders in Canada does not establish oppression of itself by reason of the present summons issued to him.”