The 4350water Blog highlights some of the issues relating to proposals for potable reuse in Toowoomba and South East Qld. 4350water blog looks at related political issues as well.

Wednesday, April 15, 2009

Anna Bligh - 1 degree of separation from Nicholas Bolton's BrisConnections payoff ...

Readers will remember that Anna Bligh got into a spot of bother by putting her feet up on holidays in Sydney at the rather comfortable home of former Federal ALP Minister Ros 'white board' Kelly.

It was all above board and innocent and Anna only reluctantly agreed to disclose her stay in the Parliamentary Register of Members' Interests.

She said it was all work - watering the plants and walking the dog.

The problem arise because Ros Kelly nowadays is a director of Theiss who were awarded the contract for the BrisConnections tunnel work - not long after Anna's holiday stay - no connection though.

Times have moved on and the BrisConnections project got itself in a pickle over its partly-paid units with Melbourne-based Nicholas Bolton acquiring 77 million odd units and threatening to wind up the Trust.

It's unclear if this could have been achieved but he did create headaches for everyone involved, including Anna Bligh (as well as Trevor Rowe and QIC), by winning round one of the court battle and bloodying the noses of the BrisConnections board which includes the odd Brisbane business heavyweight.

So it was interesting to note that Mr Bolton had sold his voting rights to an unincorporated joint venture between Theiss Pty Ltd and John Holland Pty Ltd for $4.5 million (about 5.81 cents per unit).

The windup resolution was easily defeated.

Expect the underwriters to now finalise an agreement to forgo pursuing unitholders for the next $1.00 payment and the unitholders to forfeit their units.  Mr Bolton gets his greenmail payout (less costs, tax and any amount owed to any financial backers) and the other shareholders get off the hook.  

BrisConnections ends up privatised.  And the financing package remains in place.

Trevor Rowe and the QIC get to bury their open financial sore from public view. (You will recall they turned a $30 million investment of Qld superannuation funds into $30,000.)

And Anna Bligh doesn't have to dig deep into the State's empty coffers to somehow fund the whole project.

So Anna's off the hook and all it cost so far was $4.5 million.  And it wasn't even government money.

Next time Anna Bligh stays at Ros Kelly's house in Sydney, they'll probably laugh at how cheaply they managed to sweep this problem under the carpet ...


Anonymous newswatch said...

Courier Mail:

How Nick Bolton pocketed a cool $4.5m

By Terry McCrann

April 15, 2009

HOW to stiff the big guys and pocket $4.5 million - and KEEP the $4.5 million. That's the story of young Nick Bolton and BrisConnections.

Big guys? They don't come much bigger than Leighton Holdings, Macquarie Bank and Deutsche Bank – all of whom are going to be well and truly, and deservedly, out of pocket.

To say nothing of the Australian stock exchange which in its institutional greed allowed the trap to be set with the listing of a defective investment product in the first place.

It all comes down to the substitution of one letter – H for I. Young Nick's ASI – Australian Style Investments – owns the units in BrisCon and is up for $77 million this month and another $77 million next year.

But it is young Nick's ASH – Australian Style Holdings – that has pocketed the $4.5 million of Leighton money.

BrisCon and indirectly MacBank and Deutsche can go knocking all the way to the corporate knackery on the ASI door for the $77 million plus $77 million.

But they can't touch the money inside ASH. Game, set and $4.5 million match to young Nick. Absent perhaps an interesting discussion with the tax office.

Did young Nick also stiff his fellow small investors in BrisCon – getting them to turn up to the general meeting yesterday, only to find their votes had been rendered futile by Bolton switching sides?

Instead of his 20 per cent anchoring a successful wind-up vote; it delivered the rejection.

This was exactly captured in BrisCon posting Bolton's letter urging unitholders to vote for the wind-up six days, as we now know, AFTER he had committed to voting AGAINST the wind-up for $4.5 million.

Which is of course precisely why Leighton parted with $4.5 million. It didn't want the actual building of the toll way to be caught up in all the mess of a BrisCon wind-up.

Yes, in theory unitholders would still have been liable for the $1 a unit – the judge made it clear that would be the case yesterday.

And, yes, MacBank and Deutsche would still have been liable to make up any money not paid by unitholders. And then be able to chase those defaulting unitholders all the way to bankruptcy.

But it would have been at best messy; and almost certainly have cost Leighton more, much more, in legal and other costs. With some serious uncertainty over ultimate outcomes.

MacBank and Deutsche are not so lucky. They are up for as much as $387 million on the payment at the end of the month. That's if all unitholders failed to pay their $1 a unit.

While that's unlikely, they know full well they are going to have to cough up $77.4 million that Young Nick won't be paying. Correction, ASI won't be paying as it probably doesn't even have the proverbial brass razoo.

In doing so they will reap the whirlwind of sowing a boom-time breeze – a defective almost Ponzi-like product that to the ASX's expanding disgrace and incompetence but not seemingly its corporate embarrassment, it endorsed.

In a moral sense Bolton clearly stiffed his fellow small holders. They were the cannon fodder in the game of poker he was playing with Leighton, MacBank and Deutsche.

He gets the $4.5 million; they get stuck with the $1 a unit to pay, all the way up to personal bankruptcy.

In a practical sense though, he hasn't cost them. Indeed, he nearly got them off.

The poker was played all the way up to yesterday's day in court and the meeting. That was when MacBank was desperately trying to put a deal together to take small investors out and to avoid a wind-up.

If MacBank had succeeded, Bolton would have been their hero. But either way it had to be done before the meeting.

If the meeting HAD voted for a wind-up, that would have been the end of any MacBank deal.

Now that there's no prospect of a wind-up, there's also no point in MacBank buying anyone out.

Either way it – and Deutsche – have to make up any shortfall. At least they will have units of some value in a going concern. As opposed to having almost certainly valueless units in a BrisCon in liquidation.

In simple terms then, Bolton's turnabout hasn't cost other unitholders and might even have preserved some value for them.

It's cost Leighton $4.5 million directly and MacBank/Deutsche $77.4 million they will have to outlay on his units. The buying of which was crucial to give Bolton the aces in his high-stakes game.

Assuming it works. That the liability stays with "I" and the Leighton money stays in "H".

Critically "I" did not sell the units to Leighton. If it had it would have had to take the Leighton money. And then pass it to BrisCon, reducing a tad the MacBank/Deutsche liability.

All "I" did was to agree to vote in a certain way and "request" Leighton to pay the money to "H". The key is presumably that "I" has no legal basis for claiming that money back.

So when as inevitably happens, "I" goes into liquidation, even the liquidator can't get any money from "H". As "H" doesn't owe it to "I".

Nick sets out to bankrupt BrisCon. In the process of failing, bankrupts his own "I" company – while enriching his other "H" company. To the big boys' cost and the ASX's shame.

Grim days for cars and planes

IF THERE is one thing the Qantas profit downgrade demonstrates with brutal clarity is the difficulty and unwisdom in trying to forecast the future.

Indeed forecasting the PRESENT can even be unwise. Better to stick with forecasting the past – although even that can bring you embarassingy undone.

Not much more than a year ago Qantas was, well, flying high. Incoming chairman Leigh Clifford was able to predict a full-year profit at least 40 per cent higher than in 2006-07.

This one proved almost precisely correct. In August Qantas unveiled a 46 per cent profit lift for 2007-08. But also a likely big profit slump, towards $750 million in 2008-09.

That's got progressively worse, down to $500 million in November and now somewhere between $100 million and $200 million.

But at least the flying kangaroo is – at least predicting to be – still in profit. Most of its peers are firmly in the red. And it has $3.2 billion sitting in the bank.

At the other end of the transport scale, Holden was quick to ridicule the prediction about its future. That it didn't have one.

Holden might have been entirely right that the editor of the pointedly named Dog & Lemon Guide, Clive Matthew-Wilson, was engaging in shameless self-promotion by predicting the end of the world not just for Holden but the entire domestic car industry.

The rebuttal though did rather miss the substantive point. That the only way to have a SUSTAINABLE future is with radical reform.

In a word, amalgamation of the, somewhat less than, big three. Because three makers are only "survivable" as corporate zombies, feeding off the taxpayer tit.

Put all the good bits of Toyota, Ford and Holden together, and you might actually end up with something that could pro-actively make half sensible use of the taxpayer billions.

At least getting – hopefully – survivable scale. For what is actually a good product at reasonable, pre-taxpayer - money.

What is in prospect is the money being scattered around like confetti – and the makers and the jobs disappearing, one by one anyway.

11:56 AM, April 15, 2009

Anonymous newswatch said...

Sydney Morning Herald:

Connecting all the Bris bits

April 15, 2009

OWNERSHIP is a flexible concept. Take Wal King's Leighton subsidiary, the builder Thiess John Holland.

Faced with its Brisbane airport link being broken, Thiess, the only party in the whole unsavoury BrisConnections affair without an odour of conflict, steps in to save the day.

Thiess paid Nicholas Bolton $4.5 million to borrow his voting rights for the day so it could vote them against the very proposal he championed to wind up the company. Hey, a man's got his price.

Not that Thiess actually bought the shares. That would come with the familiar sting in the tale of a $1 instalment due any day now, totalling a few squillion. Bolton gets $4.5 million with his right hand but as holder of the units in his left hand still owes tens of millions in instalment receipts. Turns out he's got an answer for that, too.

Last week in court, Bolton claimed to have struck a put option deal with his dad's best mate, John Howard Williams, that allowed him to transfer up to 77 million BrisConnections units to him ahead of the call date. That deal, the court heard, was brokered by Bolton's father, John, negotiated over a glass of red at Melbourne Wine Room, agreed to in the back of a car, and signed on the family couch.

Such a pity Justice Ross Robson found the put option to be a sham. Still, no time like the present for Williams to step up and take all that debt off Bolton's hands. Makes one wonder how the corporate plod might view things.

Staying mum

Say, wonder if the deal was supposed to see the light of day. The terms of the deal between Bolton and Thiess say Bolton must "not disclose this agreement or any of its terms to any person either before, at or after" the meeting except as required by law. When Leighton secured his voting rights, the law required it to lob a substantial shareholder notice.

Fee for service

With punters fearing bankruptcy from the outstanding payments on the BrisConn instalment receipts, Bolton offered to take them off their hands. For a $1305 administration fee. Say, given Bolton's fee-gouging success from Leighton and punters, it's enough to make a MacBanker proud. Maybe Nicholas Moore could give him a job.

11:57 AM, April 15, 2009

Anonymous newswatch said...

Courier Mail:

Secret deal creates stir over BrisConnections

James McCullough and Tony Grant-Taylor

April 15, 2009

A SECRET deal between Nicholas Bolton and the builder of Australia's largest infrastructure project yesterday saved Brisbane's massive $4.8 billion airport toll road.

A fiery special meeting in Brisbane of the company running the project, BrisConnections, turned into a circus after the disclosure that Mr Bolton had done a secret deal with Thiess John Holland to sell the voting rights for $4.5 million.

Under the agreement, the 27-year-old Melbourne IT entrepreneur was gagged from talking about the deal, first mooted last Wednesday, and banned from attending the meeting.

Mr Bolton, through his company Australian Style Investments, had sought to wind up BrisConnections yesterday after shelling out about $50,000 in the past six months to acquire a controlling 19.8 per cent stake in the company.

The deal gives Mr Bolton $4.5 million cash in his pocket but still leaves him and thousands of mum and dad investors facing huge liabilities.

Many investors bought the stock at just 0.1c but did not realise they had to cover two instalment payments of $1 each, due on April 29 and January next year. Mr Bolton still owes more than $154 million, given his 77 million units.

He would not comment on whether he will be forced to fork out for the next two instalments but Thiess and BrisConnections said he is liable for the $154 million.

The Courier-Mail can also reveal BrisConnections tried and failed to get the State Government to funnel traffic on to the toll road.

11:59 AM, April 15, 2009

Anonymous newswatch said...

Business Spectator:


6:46 AM, 15 Apr 2009

Alan Kohler
The bolter and the bankers

So that nice young Nicholas Bolton, champion of the benighted BrisConnections mums and dads, turned out to be a cad and a bounder – a bolter, in fact.

Last Wednesday he sold his votes (but not his shares) to a no doubt bitterly grumpy Wal King of Leighton Holdings for $4.5 million and on Saturday lodged his proxies against all of his own resolutions for yesterday’s general meeting. Thus when the meeting began, everyone knew it was a non-event except the 50 souls who turned up to vote for their saviour Mr Bolton.

It didn’t matter anyway. They would almost certainly have still been on the hook for $1 a share in a fortnight if the trust had been wound up and/or BrisConnections Management Co had been removed as the responsible entity (RE), although there was a sliver of doubt about that, which is what brought 50 of these disaster victims out on a wet and humid Brisbane day.

And of course Nicholas Bolton has not bolted – he is still up for $77 million on April 28th, and although he has apparently squirrelled the $4.5 million away in a separate entity his bankruptcy trustee will no doubt go after that money when the time comes.

That is, if there isn’t a resolution of this mess between now and then - which there must be.

The underwriters, Macquarie Group and Deutsche Bank, and probably together with the contractor, Leighton subsidiary Thiess John Holland, and the Queensland Government, know that they will have to offer to let unitholders walk away from their units and their liabilities.

Macquarie has accepted this; Deutsche is trying to squeeze Premier Anna Bligh for $300 million before agreeing, which is worth a try perhaps. Leighton’s Wal King probably reckons he has done his bit by buying off the Bolton nuisance.

There are two instalments of $390 million still due to help fund Brisbane’s airport tollway. The next is due on April 28th and the final instalment a year later.

BrisConnections expects a 60-65 per cent default rate on these (a third of them are thought to be in for the long haul and prepared to pay), which means the underwriters are up for a total of about $500 million.

They could probably come close to getting that back by bankrupting all of the non-paying unitholders and seizing their assets, but nobody thinks that would be a very good idea. It would certainly be very unhelpful politically, which is why, presumably, Deutsche thinks the Government might be good for some of it.

The reality is that Macquarie, Deutsche, the State Government and Leighton are going to end up as large BrisConnections unitholders, and they are going to get their units for $2 each rather than the $3 in instalments at which they were issued. They are just arguing over who pays what.

One thing that won’t happen is the end of the project. Yesterday, as the BrisConnections unitholders arrived at the Convention Centre in their futile attempt to wriggle out, the company’s 1300 staff were already at work and the tunnelling had resumed after the Easter break.

12:17 PM, April 15, 2009

Anonymous newswatch said...

The great BrisConnections con game

15 April 2009

Nick Bolton pockets $4.5m on BrisConnections

It was greenmail, no matter how you look at it.

Nicholas Bolton pushed for a meeting of unitholders in BrisConnections, then abandoned his course of action and grabbed the $4.5 million offered. by Leighton Holdings' subsidiary, Thiess John Holland.

The news of the cash grab ended the attempts to wind up BrisConnections that Mr Bolton, a self-styled activist, had been pushing for.

That had been expected to jeopardise the nation's biggest infrastructure project but he did an about face - and netted himself $4.45 million in the process. He had paid just over $47,000 for his 18.4% stake.

His company Australian Style Investments sold voting rights for its 77 million securities in BrisConnections, the builder of the $4.8 billion Brisbane airport toll road, to Thiess-John Holland. Thiess-John Holland is a subsidiary of Leighton Holdings, the company that won the contract to build the road.

Leighton revealed its deal in this announcement to the ASX at 1.10 pm yesterday.

Earlier, Australian Style issued this statement filed at the ASX , urging unitholders to vote for the winding up and recapitalisation of the trust.

The meeting was told that Mr Bolton agreed to the sale last Wednesday: BrisConnections' chairman, Trevor Rowe, reportedly told the meeting the company received a proxy form from Australian Style Investments on Saturday, which indicated it was voting against all the resolutions he proposed.

Bolton was engaged in a court battle against BrisConnections. He had pushed for a meeting of unit holders that had been expected to commence wind-up proceedings yesterday.

Instead he didn't attend the meeting, his company voted against his motion and it then emerged that he had sold his shares to the constructors.

The resolution to wind up the BrisConnections trusts failed to secure 75% of votes needed for force the wind up.

Reports said discussion was heated and BrisConnections chairman, Trevor Rowe came in for criticism, but Mr Bolton's move only attracted 36.6% of the votes, well short of the necessary number.

BrisConnections chairman Trevor Rowe attracted the most criticism due to his related role as chair of the government-owned Queensland Investment Corporation; the move attracted only 35.66 per cent support.

But the meeting was stunned when Mr Rowe later revealed that Mr Bolton's 18.4% stake had been voted against his own resolution.

Mr Rowe revealed that Australian Style Investments had voted against all seven resolutions when its proxies were received on Saturday.

But obviously Leighton's subsidiary waved a bigger cheque or its offer proved more seductive to Mr Bolton.

Jim Byrnes, the colourful Sydney business identity was prominent at the meeting. The company he represents, Brisbane Toll Roads owns 13% of BrisConnections.

At 9 am yesterday the Queensland Supreme Court allowed the meeting of unit holders to be held.

Justice Dutney of the Supreme Court of Queensland did not uphold any of the claims put by Macquarie Group, co-underwriter and financier of BrisConnections, or grant an injunction sought by the investment bank to stop a meeting of unit holders from proceeding.

His judgment took just two minutes, but Mr Bolton had already voted again his own motions and taken the money and run.

Now we can be assured that a deal will emerge in the next two weeks that will take Mr Bolton's actual units from him.

The most logical way is some sort of privatisation by Macquarie and or Deutsche/Leighton.

All three would be criticised if they tried to force small unitholders to pay the $1 a security second payment, having done a deal with mr Bolton for his voting rights.

Mr Bolton was gloating in the media this morning and indicated the 77 million units were owned by Australian Style, but the $4.5 million was paid to another company.

12:20 PM, April 15, 2009

Anonymous newswatch said...

Sky News:

BrisCon board push for privatisation

Wednesday April 15, 2009

The board of embattled toll road operator BrisConnections is pushing for a privatisation, relieving unit holders of future financial obligations.

The company's chairman, Trevor Rowe, told the Australian newspaper that he is planning on pushing underwriters Macquarie and Deutsche Bank to provide relief for unit holders who must pay two more instalments of $1 each on their securities.

Yesterday, the major shareholder in Australia's largest road tunnel project torpedoed his own plan to wind up the company, selling his voting rights for $4.5 million.

Melbourne entrepreneur Nicholas Bolton, through his company Australian Style Investments (ASI), called the extraordinary general meeting in Brisbane on Tuesday.

The vote had been sought to allow unit holders to wind up BrisConnections, the developer of Brisbane's $3.4 billion Airport Link tunnel, and relieve them of the two $1-a-unit calls on their investment.

BrisConnections chairman Trevor Rowe told the meeting the company was viable, but if it was wound up liquidators would pursue any outstanding instalments.

'The board concludes, quite frankly, that as a going concern BrisConnections has economic value,' he said.

But it was revealed the fate of the vote was decided last Thursday when Mr Bolton struck a deal with Thiess John Holland, the design and construction contractor for the Airport Link, to buy his crucial proxy votes and block the wind-up.

The about-face by Mr Bolton, who was not at the meeting, came as a shock to angry unit holders.

Unit holder Luciano Giangiordano described it as 'a sham'.

Another unit holder John Cunningham said he was 'disappointed' by both BrisConnections and Mr Bolton.

'I feel most of the unit holders have been betrayed,' he said.

Thiess John Holland said in a statement the deal, which began with an approach by Thiess to ASI last Wednesday, had been made to save 'a vital piece of infrastructure for the people of Queensland'.

'Thiess John Holland took this unprecedented action to seek to ensure the project continued without disruption,' it said in a statement, adding the project would create around 10,000 jobs over its life.

BrisConnections was listed last year as a partially-paid stock, with investors paying an initial $1, with an additional $2 owed in two future instalments.

The stock subsequently tumbled to less than one cent amid the global credit crunch as institutions bailed out.

Investors are still required to pay the first of these instalments on April 29.

In another twist, James Byrnes, the corporate representative for another large unit holder Brisbane Toll Road Link Pty Ltd, unsuccessfully sought the removal of Mr Rowe as chairman of the meeting because of a potential conflict with his role as chairman of major unit holder QIC (Queensland Investment Corporation).

Mr Byrnes said he planned to take legal action on behalf of his client and possibly other unit holders.

'We would be happy for them to participate in a class action,' he said.

'He (Mr Bolton) has ... led a lot of nice people up the garden path.'

After the meeting, Mr Rowe indicated BrisConnections may become a private company, which could also be a way out of the instalment payments for some investors.

He also said he planned to push the project's underwriters Macquarie and Deutsche Bank AG to agree on a new plan to let off investors.

A similar move by Macquarie failed last week.

'I don't control the various parties here and we are coaxing them to support the Macquarie Bank initiative, but so far the other parties haven't,' Mr Rowe said.

Queensland Treasurer Andrew Fraser said on Tuesday it was important the project remained on track and the private parties settled their dispute themselves.

The 6.7km toll road project is due to be completed by mid-2012.

12:22 PM, April 15, 2009

Anonymous newswatch said...

The Age:

In defence of Bolton
Stephen Mayne
April 15, 2009

Beating up on maverick

BrisConnections greenmailer Nicholas Bolton has become a bloodsport for the nation's media, but there's another angle to his story.

Whilst it obviously looks hypocritical and opportunistic to pocket $4.5 million for voting against his own resolutions at yesterday's EGM in Brisbane, unitholders are still in a much better position courtesy of Bolton's tactics.

To start with, the university drop-out took on that $77 million liability attached to the 19.5% stake he accumulated from dozens of small investors which is still due and payable on April 29. Those who sold to Bolton have potentially saved their houses.

And in taking on that liability, Bolton has played a legal and public relations game which makes it practically and politically untenable for underwriters Macquarie and Deutsche Bank to start bankrupting hundreds of small investors.

Australia doesn't have a strong enough culture of shareholder pressure, but this upstart has pulled off one of the great activism coups.

Macquarie is used to going the legal heavy on opponents but the Millionaires Factory was humiliated with defeats in both the Victorian and Queensland Supreme Courts.

And Bolton is right to point out that Justice Dutney yesterday ruled in Brisbane that he was satisfied the two final instalments were still payable even if the trusts were wound up.

So while Bolton has structured his $4.5 million Leighton payment to go to a different vehicle from the one carrying the $77 million liability payable at the end of the month, it still doesn't make a lot of sense to pocket the cash without a subsequent deal that relieves investors of the second instalment.

Maybe he wants to become the Cory Worthington of the investment world, but the odium of being labelled a greedy greenmailer will stick and it won't be easy hanging onto the cash.

Bolton's punt

Bolton doesn't need the likes of colourful investment adviser Jim Byrnes coming after him for a share of the booty, so he's clearly still punting on Leighton, Macquarie and Deutsche doing a deal to take BrisConnections private and relieve investors of their collective $800 million liability.

The prospect of writing out a big cheque certainly didn't worry investors in either Leighton or Macquarie Group, which saw their shares rocket by 5% and 9%, respectively, yesterday.

Macquarie has already generated $138 million in fees from BrisConnections and with more than $300 million in bridging loans outstanding, it will ensure the second instalment is made, come what may.

Similarly, Leighton is budgeting for a profit margin of more than $200 million on the $4.8 billion project, although part of this was due through the issue of $200 million of deferred equity in BrisConnections once the two tunnels connecting Brisbane Airport to the CBD were completed.

Paying $4.5 million to stop the project falling over is nothing for an outfit like Leighton which is three times bigger than any other Australian construction company and is used to brawling with governments, unions, bankers and sub-contractors.

The Macquarie-Leighton links

That said, there are still many questions to ask about the relationship between Leighton and Macquarie, which is deep and complex.

Leighton chairman David Mortimer is the former TNT CEO who hired Macquarie's convicted insider trader Simon Hannes to advise him through the 1996 takeover of the transport giant by the Dutch postal service.

As a professional director, Mortimer went on to chair GIO which was advised by Macquarie through its 1999 takeover battle with AMP.

Mortimer took up offices at Macquarie Bank in the late 1990s and was also appointed to the board of tollroad giant Macquarie Infrastructure Group as an ''independent'' director in 2000. MIG's independent directors have approved the payment of more than $1 billion in fees to Macquarie Bank over the past 9 years, but they dodged investing in ConnectEast or BrisConnections, the last two vehicles concocted by the Macquarie-Leighton team.

It's hard not to believe that Bolton peace deal wasn't conceived after conversations between Macquarie CEO Nicholas Moore, Mortimer and long-time Leighton CEO Wal King, who was quoted defending the move in today's press.

After all, it was Moore who pioneered the so-called Macquarie Model of listed infrastructure funds that were then gouged mercilessly for fees and Leighton has always been the contractor of choice.

Whilst BrisConnections is very much a creation of Macquarie and Leighton, the directors at yesterday's meeting didn't appear to know much about what was going on.

Ducks in a Rowe

Chairman Trevor Rowe claimed not to know about last Wednesday's deal between Leighton and Bolton until the proxies were faxed through on Easter Saturday.

Rowe doesn't have a direct history with Macquarie but his conflicts of interest are well known. The ASX should never have allowed the BrisConnections partly paid structure to proceed, but there was Trevor Rowe sitting on the ASX board.

As chairman of the QIC, the largest institutional shareholder in BrisConnections, Rowe claimed to have no involvement in the fund's decision to buy 10% for $38 million in the float.

That money is already gone and Macquarie would be well advised to come up with a privatisation proposal that relieves the QIC and Queensland taxpayers of the additional $78 million liability still to be paid.

Unlike Macquarie, which dumped its 18% stake last year, the QIC has been big enough to stick with BrisConnections through thick and thin.

Its shares, along with the 8% stake bought back by Macquarie in late March, were vital in defeating the Bolton resolutions yesterday, although clearly Bolton's 77 million shares were the ultimate swing factor.

Another of the ''independent'' BrisConnections directors is accountant John Allpass, who also sits on the QIC board and was a director of Macquarie Bank from 1994 until 2007.

Then you have Mark Snape, the Leighton representative on the BrisConnections board, who claimed at yesterday's meeting to have no prior knowledge of the Bolton deal his bosses had struck six days earlier.

Just as Bolton is playing ducks and drakes with the different vehicles within his Australian Style group, you have to look behind the appalling BrisConnections structure and the people who front it.

BrisConn's connections

At the end of day it is all about Macquarie, Leighton and Deutsche Bank.

Leighton is controlled by German construction giant Hochtief and has a long history with Deutsche Bank, whilst Macquarie has creamed billions of fees slicing and dicing infrastructure assets globally.

Unfortunately for Nicholas Moore, he got too greedy with the first major infrastructure bid that came up after he formally joined the Macquarie board as the successor to Allan Moss.

However, it would still be interesting to ask Allan Moss for his view because he didn't formally retire until May 24 last year - 9 days after BrisConnections won the tender from the Queensland Government.

It was bad enough bidding far more than its competitors for the project, but even worse was Moore's decision to press on with a tricked-up yield and partly paid structure in the face of a tumbling market.

Moore should have sniffed the breeze and pulled the float of BrisConnections last August. Pressing ahead was a folly, but to then dump Macquarie's 18% was an even bigger blunder which opened the back door to a main chancer like Bolton.

Now Macquarie will have to write out a big cheque to take BrisConnections private with Moore's reputation seriously damaged by a likely lad who lives in an apartment in Melbourne's trendy St Kilda and slinks around in skivvies and beanies.

The so-called Macquarie Model has been dead even since the global financial crisis struck and the listed infrastructure funds faced a capital strike from fed up investors sick of the fees, conflicts, poison pills, stacked boards, tax havens and excessive gearing.

Listed infrastructure vehicles were Australia's biggest contribution to the Wild West of the global financial crisis. It was Nicholas Moore's baby but who would have thought another Nicholas almost half his age would find himself administering the last rites.

As for the claimed $200 billion-plus infrastructure program that the state and Federal governments hope to roll out over the coming five years, let's hope the government bond market can keep absorbing $2 billion a week because the financial engineers are no longer a viable option.

Stephen Mayne contributed this article to BusinessDay and publishes The Mayne Report. He owns 1150 BrisConnection units.

12:32 PM, April 15, 2009


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