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-Kurt Vonnegut
The former treasurer’s small-cap sand miner commits a classroom M&A snafu.
Mark Di StefanoColumnist
Former world’s best treasurerWayne Swanhas been building a tidy post-political life. There’s the chairmanship of Cbus, the industry super giant, the commercial property andunion donor powerhouse.
He’s on the board of Industry Super Australia, alongside union mates such as Sally McManus and Michael O’Connor, plus membership of the new umbrella organisation, Super Members Council, chaired by his mate Nicola Roxon. He’s also currently national president of the ALP.
Former world’s best treasurer Wayne Swan. Michele Mossop
But under the radar, Nambour’s No. 2 boy has also been serving as the chairman of Diatreme Resources, a Queensland-based ASX-listed silica mining firm.
What does Swanny know about small-cap mining companies, or … sand? Assume for a moment that the $80 million market cap firm puts a high value on the man’s many talents, operating as it does under the purview of a Queensland Labor government. There’s also governance to think about.
Diatreme’s fortunes are pinned on massive sand pits situated at Cape Flattery, near Cape York. Last year, Diatreme sought merger discussions with fellow minnow Metallica Minerals, the owner of an adjacent sand mine. The companies entered into an agreement, allowing both to kick the tyres.
Months went by and Metallica heard nothing. Then two weeks ago, Diatreme pounced, announcing to the ASX an intention to take over the whole of Metallica with an all-scrip offer. The proposal came with a 38 per cent premium for Metallica investors, whose shares have traded around 2¢ in February.
Last week, Diatreme came back to the market with an embarrassing update. Diatreme CEO Neil McIntyresaid Metallica had replied, alleging the company had breached a confidentiality agreement the two firms signed in October last year. That agreement contained a standstill provision, that neither would try to buy shares of the other without written consent. Whoops!
On Tuesday this week, Diatreme said the company would now seek a waiver from Metallica over the standstill agreement. Or take the issue up with the Takeovers Panel.
The farrago has understandably unimpressed Metallica – it’s understood the firm believes the offer undervalues the small-cap firm, opening the door to options with other larger companies. In response to this see-sawing, Metallica’s stock has shot up 40 per cent over February, naturally, making that Diatreme offer look stale.
Breezing over a confidential standstill agreement seems like a classroom M&A snafu that could be avoided with a strong board, containing sharp corporate minds. The type of thing that’d be caught by a detail-oriented chairman.
Never mind. As well as the super and sand groping, Swanny remains available on the speaker-for-hire circuit. Speaker wranglers Saxton pitch the former treasurer’s impressive credentials, suggesting “talking points” for the former treasurer. Among them “corporate governance”. At least Swanny will have something to talk about.
Mark Di Stefano is Rear Window columnist, based in the Sydney newsroom. He previously worked at BuzzFeed, the Financial Times and The Information before joining the Financial Review as a media and tech correspondent. Connect with Mark on Twitter. Email Mark at mark.distefano@afr.com
