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Echo Entertainment chairman John Story has resigned from the board of the casino operator due to James Packer's efforts to remove him.
"The board of Echo has formed the view that the ongoing disruptive campaign ... for the removal of Mr Story was damaging to the company, and that it was in the best interests of shareholders that Mr Story not contest the resolution," Echo said in a statement today.
Mr Story wanted the issue to be put to shareholders but accepted the view of the board, Echo said.
Mr Packer is the largest stakeholder in Echo's rival casino operator Crown, which holds a 10 per cent stake in Echo.
Echo shares rallied on the news, rising as much as 4.7 per cent to $4.50, before easing back to $4.44 in recent trade. The shares are up about 24 per cent in 2012, mainly because of speculation that the billionaire wants a bigger stake.
Echo is worth about $3 billion, roughly half the size of Crown.
Crown shares, 48 per cent owned by Mr Packer, were recently down 15 cents, or 1.8 per cent for the day, at $8.21, and up just 1.7 per cent for the year.
Echo shareholders were due to meet in July to consider Mr Packer's request that Mr Story be removed from the Echo board, and that Jeff Kennett, the former Victorian premier, be appointed. A meeting may still go ahead to consider Mr Kennett's nomination.
Mr Packer’s move is aimed at giving Crown a piece of the lucrative Sydney casino market.
Echo owns the only casino licence in Sydney, and operates the Star. It also owns the Jupiters casinos on the Gold Coast and in Townsville, and the Treasury casino in Brisbane.
Crown operates the Crown casino in Melbourne and the Burswood casino in Perth.
John O'Neill, a non-executive director at Echo and chief executive of the Australian Rugby Union, has been appointed acting chairman of Echo. AAP
Echo chairman bows to Packer pressure - 8th June 2012...
Update Echo Entertainment chairman John Story has resigned from the board of the casino operator, blaming James Packer's efforts to remove him.
"The board of Echo has formed the view that the ongoing disruptive campaign ... for the removal of Mr Story was damaging to the company, and that it was in the best interests of shareholders that Mr Story not contest the resolution," Echo said in a statement today.
Mr Story wanted the issue to be put to shareholders but accepted the view of the board, Echo said.
John O'Neill, a non-executive director at Echo and chief executive of the Australian Rugby Union, has been appointed acting chairman of Echo.
In a statement released this afternoon, Mr Packer welcomed the appointment of Mr O'Neill as acting chairman.
Mr Packer also dropped his efforts to seek a meeting of Echo shareholders his plan to get former Victorian premier Jeff Kennett onto the board of rival casino operator Echo Entertainment.
Echo jumps
Mr Packer is the largest stakeholder in Echo's rival casino operator Crown, which holds a 10 per cent stake in Echo.
Echo shares rallied on the news, rising as much as 4.7 per cent to $4.50, before easing back to $4.44 in recent trade. The shares are up about 24 per cent in 2012, mainly because of speculation that the billionaire wants a bigger stake.
Echo is worth about $3 billion, roughly half the size of Crown.
Crown shares, 48 per cent owned by Mr Packer, were recently down 15 cents, or 1.8 per cent for the day, at $8.21, and up just 1.7 per cent for the year.
Echo shareholders were due to meet in July to consider Mr Packer's request that Mr Story be removed from the Echo board, and that former Victorian premier Mr Kennett be appointed. That meeting will now not proceed.
Mr Packer’s overall move is aimed at giving Crown a piece of the lucrative Sydney casino market.
Echo owns the only casino licence in Sydney, and operates the Star. It also owns the Jupiters casinos on the Gold Coast and in Townsville, and the Treasury casino in Brisbane.
Crown operates the Crown casino in Melbourne and the Burswood casino in Perth.
Genting interest?
Separately, Echo Entertainment's board has not had any discussions with Singapore gaming operator Genting, which revealed today it had built a stake in the company, a source with knowledge of the situation said.
Analysts have speculated that Genting is preparing for an acquisition, having built up a war chest of $S3.9 billion ($3 billion), and said Echo's casinos were in cities where Genting had attempted to win licences in the past. AAP, with BusinessDay, Reuters
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Australian business press digest: June 7...
Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
--The possibility of John Story resigning as chairman of casino operator Echo Entertainment Group was discussed this week during investor meetings in a bid to negate a campaign by billionaire James Packer to have him removed. "The basis of the proposal was the concern that James Packer was threatening to do damage to Echo on an ongoing basis it wasn't a concern in relation to my chairmanship, it was about diffusing the situation," Mr Story said. Mr Packer's Crown Ltd, a rival casino operator, currently owns 10 percent of Echo. Page 23.
--A report by professional services firm PricewaterhouseCoopers has found that large resources companies are looking to spend their cashflow on growth, while their investors would prefer capital returned due to concerns over falling commodity prices and rising project outlays. "What has surprised is the disconnect versus the rest of the market to turn that around, it is going to take a realignment of expectations between the industry and investors," Jock O'Callaghan, mining leader and PwC, said. Page 25.
--Private equity firm Castle Harlan has been sued in the United States by an investment firm over what the latter alleges was a "quick-flip" sale of Norcast Wear Solutions to Australian foundry and engineering firm Bradken. Bradk en acquired the Canadian firm for A$217 million, after Castle Harlan purchased the business from Pala Investments for A$190 million only hours earlier. Pala lodged a case in the Federal Court against Bradken last month, claiming that the firm had participated in bid rigging. Page 25.
--James Warburton, chief executive of free-to-air broadcaster Ten Network, yesterday warned that there would be no short-term rebound in television advertising revenue. "We must be smarter [about programming costs] and we must drive our average hourly costs down," Mr Warburton said. The company yesterday announced a A$200 million capital raising, which would be used to pay down debt and cover the cost of new programming. Page 26.
THE AUSTRALIAN (www.theaustralian.news.com.au)
--Qantas Airways has dropped more than A$600 million in value this week after chief executive Alan Joyce announced a 91 percent drop in underlying pre-tax profit to between A$50 million and A$100 million. The unexpected announcement, which sparked a plunge in Qantas shares to A$1.125 yesterday from A$1.42 on Monday, has led some to question how much longer Mr Joyce will be leading the airline. Page 23.
--Margaret Jackson, former chairman of Qantas Airways, yesterday said that the airline's board decided to present to shareholders A$11 billion takeover bid for the company by the Airline Partners Australia consortium in late 2006 because "it was deemed to be a good offer". "The aviation industry at the time was going through an unusually favourable environment," Ms Jackson added. Qantas' current market capitalisation is approximately A$2.6 billion. Page 23.
--Bruce Gordon, James Packer, Lachlan Murdoch and Gina Rinehart have all banded together to inject A$84 million into a capital raising designed to ease the debt burden on Ten Network. The free-to-air broadcaster is looking to raise A$200 million to invest on programming and provide flexibility. "Given the uncertain revenue environment and our strategy of investing in programming renewal, the board felt it was important to strengthen our balance sheet at this time," Mr Murdoch, chairman of Ten, said. Page 23.
--Marius Kloppers, chief executive of BHP Billiton , yesterday rebuffed calls for the resources giant to return more capital to shareholders, with speculation mounting that the company will scrap its five-year capital expenditure goal of A$82 billion. "I have to tell you that my baseline demeanour against a volatile current backdrop is to be very conservative conservatism stood us in good stead in the global financial crisis and will stand us in good stead as we try to create long-term value in this current environment," Mr Kloppers said. Page 23.
THE SYDNEY MORNING HERALD (www.smh.com.au)
--The former head of the Brown Brothers winery and current chairman of the Australia's First Families of Wine awareness group, Ross Brown, yesterday criticised major retailers for filling store shelves with copycat brands. In an address to a First Families event, Mr Brown reportedly declared that some retailers were acquiring surplus wine and putting a label on it to make it more alluring to customers. "I call them hollow logs they are just a label which has none of these values that traditional family wine companies bring to the market," he said. Page B1.
--Fund managers have expressed outrage after investment bank Macquarie Group recently announced it would more than double the yearly fees for distributing products on its investment platform. "You've basically got to pay up to stay on board ultimately what it means is I've got to pass it on - so the end user will suffer," said Winston Sammut, director of Maxim Asset Management, which has pulled its fund from Macquarie's platform. Page B3.
--Tony Haggarty, managing director of Whitehaven Coal, yesterday said the miner's Ferndale joint venture with Coalworks would not be impacted by an investigation by the Independent Corruption Against Commission into former New South Wales minister Ian Macdonald's granting of mining rights. "I don't see how [the inquiry] could affect the standing of the tenement that omelette would be extremely difficult to unscramble," Mr Haggarty said. Page B3.
--Fears over the ability of Reed Group to survive have increased as subcontractors who are owed money by the construction firm are being asked to join a class action against the New South Wales government. The news comes after the state Department of Education revealed that it did not owe anything to Reed for construction contracts relating to Building the Education Revolution projects. Page B3.
THE AGE (www.theage.com.au)
--Global miner BHP Billiton is preparing to drastically restructure its A$20 billion expansion of Port Hedland's outer harbour after yesterday announcing that it would prefer a staggered development of the Western Australian port due to the state's "pretty hot" economy. "We probably feel that dramatically upping your workforce requirements and so on, and your capital spend right now is not what we want to do, particularly because we are kind of fully committed over the next two years on our capital spend," chief executive Marius Kloppers said. Page B1.
--Broadcasters, mobile phone network operators, emergency services and other users of Australia's wireless spectrum have been asked to help update the methodology used for allocating spectrum. Oeter Haris, secretary of the Federal Department of Broadband, Communications and the Digital Economy, yesterday said that the renewing of Vodafone Hutchison Australia and Telstra's mobile licences earlier this year "was not - for all participants - very elegant". Page B2.
--The Star casino in Sydney has sued 10 high rollers, including a businessman with connections in Macau and a Thailand property developer, in the New South Wales Supreme Court in a bid to recover A$23 million. The legal action comes after Echo Entertainment Group, owner of The Star, last week wrote off almost A$30 million associated with the collapse of SilkStar Global Marketing, a casino marketing firm targeting high rollers. Page B3.
--Australian Securities Exchange-listed gold junior Indochine Mining has become an investment target for global investment fund BlackRock, which acquired 9 percent of the company for A$5.2 million, it was revealed yesterday. The holding was acquired through a placement where BlackRock purchased 65 percent of shares on offer. Stephen Promnitz, chief executive of Indochine, predicted the spot price of gold to push beyond US$1800 an ounce before the close of the year. Page B4. Reuters
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