Spotless airs dirty laundry

 

Tim Sims’ Pacific Equity Partners yesterday lobbed a $230 million takeover offer for Patties Foods, the maker of Four’N Twenty pies.

But we were much more interested in one of the private equity firm’s previous projects, Spotless, the Margaret Jackson-chaired cleaning and catering outfit that PEP floated in mid 2014.

What is going on at that place?

We flagged on Friday that Spotless stock plunged 10 per cent on Thursday, after three million shares were traded just after the market closed.

There were no announcements on the day, which seemed strange.

Finally, an update was issued by Spotless yesterday morning — after the company was contacted by Greg Medcraft’s tough cop on the beat, ASIC, and the stockmarket, which is still looking for a new CEO to replace Elmer Funke Kupper.

Spotless — which is now run by Martin Sheppard after Bruce Dixon resigned following one of 2015’s worst received earnings updates — told the market the company was stumped to explain the recent sharp trading movements.

It added that earnings for the financial year ending June 30 were unlikely to differ from its February 23 earnings guidance. The stock closed up 5.5 per cent yesterday to close at $1.14, still almost 30 per cent below its $1.60 issue price.

There was no mention in yesterday’s announcement of any projected change to cash flow. Some in the market are hawk-eyeing that number to see how Spotless is dealing with its $800m-odd pile of debt. An indication — or even whispers — that cash flow was unexpectedly weak would be just the sort of thing to encourage sharp falls in the stock.

But the company says that’s all under control and debt is a non-issue.

It’s in the wash

Also tucked in the Spotless announcement was the news that Martin Sheppard is considering spinning off the company’s laundries business.

Apparently hawking the bit of Spotless with the highest margins is part of the new boss’s “strategy reset to accelerate growth”. Selling the best performing part of the business seems weird to us — especially with debt under control, as is apparently the case.

The logic seems to be that the laundry business is not integrated with the other arms of Spotless. It’s the one most easily amputated. We’re told Sheppard is not wedded to selling the division, but rather is exploring options after offers were made. The boss has hired Highbury Partnership to size up the interested buyers (apparently there are more than one). Exactly where Deutsche Bank’s Craig Wong-Pan fits into these offers is not clear.

But we do know the integrated investment bank’s Down Under engineering and contractor analyst is no longer allowed to comment on Spotless. Deutsche told us Won-Pan is on the “restricted list”, although they were “not at liberty to say why”.

That language seems a bit dramatic for the services business. But it sounds like there’s a German accent somewhere on the buy side.

Hooray Harry

Step aside, Zika virus infected Rio Olympics. A new Party of the Year is emerging.

Although as with many things Meriton related, the details are sketchy.

We hear the happy employees at apartment developer Meriton are throwing a knees up for their 83-year-old boss, Harry Triguboff, who was last week crowned the richest person in Australia with a fortune of $10.6 billion.

Whether the celebration will be held at Beppi’s or rival Sydney Italian institution Machiavelli — or, surely not, somewhere else — is not clear. Either way, we can’t wait to pay our respects.

There will be blood

Here’s a tip for West Australian Transport Minister and wannabe premier Dean Nalder: if you’re going to have a beer with the editor of Perth’s daily newspaper and one of the city’s best known businessmen, don’t expect it to stay a secret.

Multiple sources tell us Nalder — the former ANZ Bank and Australia Post executive who is positioning himself for a tilt at the top job if Premier Colin Barnett’s polling continues in a southerly direction — was spotted having a drink with Brett McCarthy (the editor of Kerry Stokes’ West Australian newspaper) and Multiplex heir and playboy Tim Roberts at Black Tom’s bar in West Perth earlier this month.

Bless their indiscretion!

McCarthy and Roberts are both close to Perth property king Nigel Satterley (who has a fortune just valued at $374 million on the Stensholt Rich List). There is chatter among sandgropers that Satterley is expected to swing behind the business-friendly Nalder should Barnett be rolled, as has been widely speculated.

Other mooted successors to Barnett include Joe Francis, the emergency services minister, and Liza Harvey, the deputy premier.

It sure looks like there will be blood, although not till the other side of the July 2 federal election.

The state’s Newspoll published in the May 12 edition of this paper had the Labor opposition leading the Barnett government by a devastating 56-44 in two-party preferred terms. It sent the WA political class into a state of excitement rarely seen outside of a One Direction concert.

Despite Stephen Smith’s recent Simon Crean impersonation, it looks like Labor leader Mark McGowan will lead his mob into government at the March 11 election — unless something drastic happens in coming months. So, there was lots for McCarthy, Roberts and Nalder to discuss.

LNP clear-out

Three weeks on and the fall out continues after Lawrence Springborg’s demise as leader of the Queensland Liberal National Party.

Cathy Border finished up as the director of communications in the opposition leader’s office late last week.

Border joined the LNP after a lengthy gig as Channel Ten’s state political reporter. Still no word on the future of Springborg’s chief of staff Jake Smith, who some struggle to see in the now Tim Nicholls-led opposition.

However, we can’t for the life of us see how the LNP would get by without Smith’s unrivalled collection of historical menus.

Opportunity knocks

A quick update on the search for the next chief executive of the Association of Superannuation Funds of Australia, the nation’s peak superannuation lobby group.

Chairman Michael Easson is overseeing the process to find a new CEO after Pauline Vamos announced in February that she was calling time on the $480,0000-a-year gig. Executive recruiter Heidrick & Struggles has been enlisted to help.

Last week we mentioned two names mooted as favoured replacements to Vamos: Fiona Reynolds, who runs Britain’s Principles for Responsible Investment, and David Gallagher, an academic who runs the Centre for International Finance and Regulation. Word is that the field is wider than that.

Chairman Easson has made something of a profession of crossing the fence. He began his career as the head of the Labor Council of NSW (now Unions NSW) and then went on to have a successful career in business — so who knows what he’ll do. From here on, consider us just an eager spectator.