How long does it take to make a decision on the future of a long-term CEO? South32 was interviewing would-be replacements for Graham Kerr a year ago, but there’s still no sign the Karen Wood-led board is any closer to making a decision.
South32 was spun out of BHP in 2015, and this month Kerr hit his 10th anniversary in charge.
That’s a good innings in any book, and speculation around the timing of his exit from the top job has been swirling around South32 for years.
Margin Call understands that potential candidates for the job were interviewed in Perth and Hong Kong in late 2023. But then the process went quiet, and any momentum was gone by March, when the company again rejigged its executive ranks.
It’s not clear what went wrong, and sources say that even those involved in the process weren’t given a clear answer on why the South32 board got the wobbles.
The sense in the market is that Kerr has done the job he was put in place to do. He has ditched the worst of the assets inherited from BHP, and kept cash flowing back to shareholders through dividends and share buybacks.
But what the miner doesn’t have is a convincing growth story. Its main option, a new zinc and lead mine in the US, has underwhelmed the market – particularly after South32 wiped most of its value off the books last year.
And South32 has put in a couple of shockers in recent years. Cashflows have been crunched by commodity prices, environmental regulators put the crimp on life-extension projects at its alumina operations in Western Australia and (now former) coal mines in NSW, and a cyclone wiped out South32’s manganese exports in the NT.
Not necessarily Kerr’s fault, and major shareholders aren’t exactly baying for blood. And it is entirely possible the veteran executive mounted a convincing case that the best possible CEO candidate was already sitting in the chair.
But after 10 years the board might well face a few questions at its AGM about its vision for the future – and who will lead it there.
As for South32, it says it is continuing to plan for the future including “appropriate development for executives” and succession planning for the CEO.
Kerr, a spokesman said, “remains committed to the role and enjoys the full confidence of the board”.
White buyout
After a sorry couple of weeks amid the embarrassment of the Linda Rogan affair, some good news for WiseTech Global founder Richard White.
Buried deep in the company’s annual report is the news that WiseTech has reached agreement with its founder and CEO to buy him out of office space used by the company in Chicago.
WiseTech paid White just over $1m to rent the building last financial year. Its five-year lease, worth $US600,000 a year, ended in October.
The price to buy? Based on an “updated valuation performed by an independent expert”, WiseTech settled with its founder for a “revised” $US3.5m ($5.2m) offer.
Which handily offsets the loss the software billionaire made on buying and then selling the love nest allegedly bought for the use of Rogan in the Sydney suburb of Vaucluse. Companies associated with White bought the mansion for $13.1m in late 2022 and then quietly sold it on for a $1.6m loss only four months later.
No word on whether the furniture and fittings in the Chicago office came as part of the package for WiseTech, though.
A new ERA
Call it tenacious, call it throwing good money after bad – but Willy Packer and Richard Magides just can’t help themselves when it comes to ERA. On top of appealing a takeovers panel decision to wave through ERA’s 2c share capital raising, which will likely hand the former uranium miner to major shareholder Rio Tinto, the pair are now trying to insert themselves into a court case against the federal government that seeks the reinstatement of the Jabiluka mining lease. The duo lodged an application this week that is certain to inflame tensions over ERA’s future, given it seeks specifically to have senior Mirarr traditional owner Yvonne Margarula thrown out of the case.
The reason isn’t quite clear, but both have plenty at stake.
Packer’s fund has pumped in $80m into ERA shares over the last three years, and his stake was worth about $146m in April – before it became clear the company would settle for a deeply discounted investment package from Rio to pay for its rehabilitation liabilities at Ranger, and before the federal government wiped out the Jabiluka lease. It’s not quite certain how much Magides’ Zentree Investments has shelled out on ERA shares over the years, but the $8.3m he splashed on ERA stock at 15c a share back in 2020 is just the start of it. Zentree’s shareholding was worth about $40m in April, when ERA was valued at $1.3bn by the market.
If the takeovers panel doesn’t block ERA’s 2c capital raising they will either need to double down again, or watch Rio dilute them out of existence and move to buy their stock on the cheap under compulsory acquisition rules.
The value of their combined holding if that happens? Less than $6m.
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