Transurban boss Scott Charlton shows his faith; Myer has conflicts galore in store

Transurban chief executive Scott Charlton is putting his money where his mouth is. Picture: Arsineh Houspian

Transurban CEO Scott Charlton has wasted no time accumulating more shares in the toll road operator over the past week following the release of record daily traffic numbers during the September quarter.

Charlton acquired 15,000 additional shares at a price of $12.57, according to an announcement released to the ASX on Wednesday. He’s also accepted 34,973 entitlements awarded under the company’s equity incentive program, which could have been deferred.

Clearly Charlton’s faith in the company is genuine and, on the face of it, he means what he says, which is more than we can say for many other company CEOs.

Just days ago he told reporter Eli Greenblat that Transurban was still well placed to withstand a severe economic downturn and, worse, the ongoing threat of employees working from home and leaving their cars untouched. None of which makes for high traffic numbers.

Yet the buy-up continues, as does his take up of his full entitlement, all of which occurred in the days after Macquarie upgraded its price target for the company to $14.28. Transurban closed up on Wednesday at $12.83.

What’s laughable by comparison is what we’re seeing at rival outfit Atlas Arteria, which is desperately raising equity to fund its stake in a US toll road, Chicago Skyway, purchased for a mere $3.1bn.

A venture utterly despised by some of its institutional backers, including IFM Investors, the board has approved a two-thirds interest in the bridge that nobody seems to like or want – except for them. They just need the money to make it happen.

Hence the company’s offer to investors of $6.30 per share on a 1 for 1.95 basis.

What’s amusing about this is that most of the board fulfilled their entitlements and accepted every available share held out to them – as we would expect. This includes co-chairs Jeffrey Conyers and Debra Goodin.

But some squibbed it in a mystifying fashion. Among them CEO Graeme Bevans, who’s been championing the Skyway deal in the press. He was able to purchase 117,773 shares under the offer but eschewed that to take up 86,029, leaving about 30 per cent on the table.

A similar story with Atlas directors Andrew Cook, who took up 8000 shares but left another 4820 hanging loose, and David Bartholomew, a director at Endeavour Energy, who accepted about 50 per cent of his entitlement.

We can’t say it instils much faith.

–

Conflicts galore

Over the weekend we drew attention to Myer director Jacqui Naylor and her curious position on the board of Cambridge Clothing, which happens to sell a large amount of clothing through the department store brand.

We’d have less to say about the matter if it didn’t jar with the great brouhaha over Solomon Lew’s nomination of Terry McCartney for a board seat, McCartney being a director of Premier Investments, a substantial competitor to Myer.

Much has been made of McCartney’s potential conflict of interest if he’s elected to the Myer board. The fear is that he’ll also have access to confidential information that could be useful to Premier’s billionaire owner.

But it turns out Naylor is not the only director with a perceptible level of conflict requiring some management.

Myer chief executive John King is a director of Raging Bull and holds 18 per cent of the shares in the company. That would be unremarkable except that Myer placed orders with the company for $1.4m during the year ended July 2022.

Solomon Lew. Picture: Stefan Postles

There are others with similarly questionable interests. Ari Mervis, who joined the board last year, is a non-executive director of McPherson’s, a supplier of health and beauty products to Myer. Weeks before Mervis’s appointment the company cited Myer, and the selling of its wares through its stores, as part of its growth strategy and method of customer expansion.

Clearly there are more than a few directors at Myer with a perceivable conflict requiring some management. We’re sure it’s all being done in accordance with the company’s conflict of interest policy which, to our amazement, was only adopted by the board five weeks ago. We weren’t able to establish if one existed before then, but we contacted Myer for a response.

Meanwhile, as this column has previously reported, Premier Investments no longer sells its brands through Myer stores and hasn’t since December.

What’s also clear is that Myer is trying to shift its tactics against Lew’s board aspirations. For years the argument hinged on the potential for a conflict and the access to confidential information. Lately there’s been a change of heart and indications that they’re willing to negotiate on “appropriate protocols”.

No, what’s bothering them much more now, apparently, is McCartney’s obvious lack of independence, but also Premier’s rejection of a plan to stop it buying up additional Myer shares (Lew already owns 22.87 per cent of the company).

Never mind that even if McCartney is elected to the board it will remain majority independent. In any case, shareholders will have the floor on November 10 to decide the matter, although we can’t say it assists McCartney that proxy adviser Institutional Shareholder Services has recommended a vote against him.

–

2B or not 2B

Billionaires James Packer and Kerry Stokes appear to have closed the book on their equity backing of Ben Brazil’s fledgling private equity venture 2B Investments (Australia) Holdings.

The company has officially been deregistered, but Brazil has been quick to morph a UK registration of 2B into his FitzWalter Capital.

FitzWalter, which has offices in London, New York and Hamburg, is 100 per cent controlled by a holding company that Brazil owns.

Brains, as he was known at Macquarie Group, raised $US920m from institutional investors for the group’s inaugural fund.

Along with Packer and Stokes, the now defunct 2B was also backed by UniSuper when it was formed in 2019.

Packer, as we know, has also moved on, having cashed in his stake in Crown for $3.4bn earlier this year to a takeover offer from Blackstone.

What to do with all that money? The billionaire has recruited Magellan founder Hamish Douglass and artificial intelligence guru Daniel Nadler, both of whom sit on an investment steering committee, to determine how the funds should be spent.

Who knows? Perhaps Brazil will send over a prospectus for FitzWalter’s next fund.