Knives out for VG8’s Rob Luciano at AGM; BridgeClimb’s millionaire operators get their fees waived

Rob Luciano was notably absent from Wednesday’s annual meeting of VGI’s Asian Investments Fund. Picture: Britta Campion

Rob Luciano was notably absent from Wednesday’s annual general meeting with shareholders in VGI’s Asian Investments Fund, known as VG8, and thus it was left to chairman Lawrence Myers to martyr himself to the mortar fire being launched from the floor.

Most of it came from activist investors David Kingston and Malcolm McComaswho put on a good show, as expected. “Lawrence, another year of failure for your shareholders,” was the opening barb from Kingston. You can imagine where it went from there.

Malcolm McComas.

Fast forward a couple of minutes and there was further jousting with Myers over a plan to rename the fund. The resolution was for a sober rebrand (Regal Asian Investments Limited) in honour of VGI’s merger with Regal Funds Management earlier this year. Kingston offered an alternative, in memory of its founder and former potentate.

“Mr chairman, would you support changing … the name to the Rob Luciano Punting Fund?”

“It’s a stupid question,” said Myers, tautly. “It’s not dignified with a response.”

And so it went for another hour or so. Yet it was still left to Myers and VG8 board member Adelaide McDonald to explain how Luciano sunk – or punted? – $5m of investor funds into SenSen Networks, a microcap whose chief financial officer happened to be his brother-in-law.

As the story goes, Luciano experienced a rush of blood over this stock during a Christmas family gathering in 2020. He then ordered bemused staff into VGI’s offices on Boxing Day to get the paperwork ready. Two weeks later VG8 emerged as a cornerstone investor in SenSen’s capital raising, taking out 40 million shares for 12.5c.

And how’s that turned out? The stock closed at 7c on Wednesday. Regal’s founder, Phil King, seems to have been dumping the stock since taking control of VG8, selling it off in batches since July and closing out the position only recently.

Regal’s managing director Brendan O’Connor was sincere enough to own the palaver. He told investors that SenSen, among other stocks in the portfolio, was no longer an appropriate investment for the fund’s purposes. He can call it a shake up, but we’ll call it a boondoggle.

The only loose strand is why VG8’s board waltzed right into the SenSen caper knowing that it fell so clear of the fund’s mandate for large and liquid investments.

According to McDonald: “The manager explained at the time their reasoning around why they believed a holding in that stock was relevant and the board accepted that.”

But it turns out the board wasn’t made aware of the conflict of interest. It was declared in a company register but no one on the board chanced to look at it. “Not in its entirety, no,” McDonald confirmed. And this is someone on VG8’s risk committee!

Not to worry. Shareholders were still asked to approve an increase to McDonald’s salary cap and those of VG8’s two other non-executive directors, including Myers, its chairman, who did not respond to questions.

–

Bridge too far

The operators of Sydney’s BridgeClimb appear to be receiving more than a little help from the NSW government, owing to steep declines in patronage caused by the Covid-19 pandemic.

Over the weekend we reported that BridgeClimb’s trading company, Feliz Puente Pty Ltd, was facing “material uncertainty” over its ability to continue trading as a going concern.

It’s owned by Sydney’s Hammon family, whose 20-year tender to operate BridgeClimb began in 2018. They took it over from Ottto Holdings, which is owned by businessman Paul Cave. He coined the idea in the 1980s and received financial backing from billionaires Jack Cowin and Brett Blundy.

Sydney’s BridgeClimb.

A profitable venture for many years, the headwinds began soon after the Hammon family assumed control, leaving the company with deepening annual losses, despite $5m in Covid-19 support payments.

Which made us wonder what exactly the Hammons, humble millionaires that they are, have been paying the government under their deal to operate BridgeClimb. The arrangement is supposed to include an annual base fee in the neighbourhood of $1m plus 15 per cent of Feliz Puente’s revenue, which was $13.4m in FY22.

From what we’re hearing almost no money has changed hands since the outbreak of Covid. Would the previous owners, billionaires that they were, have been given such a free pass? There’s doubt in the ranks, we can assure you.

“Transport for NSW has been working with Feliz Puente to minimise the impacts of the Covid pandemic to their business, including allowing an abatement of fees payable,” a spokeswoman said. “The terms and conditions of the contract between Transport for NSW and Feliz Puente Pty Ltd relating to the fees and payment are commercial in confidence.”

Not anymore.

–

Nary a mention

A glimmer of good news for Essendon Football Club, the fleeting home of former National Australia Bank chief executive Andrew Thorburn. The Bombers have posted a small rise in underlying profit of $1.33m for the financial year to October 31. That’s practically unchanged from the $1.2m gleaned the previous year, according to the club’s annual report, released on Wednesday.

Former NAB and Bombers boss Andrew Thorburn.

Any mention of Thorburn within its pages? Not at all. The former banker was bundled out of Essendon after just one day at the helm after being given an ultimatum – resign as chairman of a church that once preached extreme views on homosexuality and abortion, or step down as chief executive.

Thorburn, for the record, says he didn’t agree with statements made by the church, but he refused to quit as its chair. On November 4 it emerged that he and the club were negotiating an exit payment.

Essendon seems to have lawyered up with King & Wood Mallesons, although the club won’t confirm it. The report discloses that none of its directors – including president David Barham, the former Network Ten head of sport and now a Victoria Racing Club director – expect the matter to “result in a material liability”.

No doubt Thorburn is hoping that it will, or perhaps he’s already turned the other cheek?