Crikey’s woman at the Westfield meeting, Cheryl Shareholder, reports back from the Sydney Entertainment Centre, while Stephen Mayne looks at how the votes stacked up and even Westfield’s general counsel joins the debate at the bottom.

Crikey at the Westfield meeting

Subscriber email – 25 June

Despite winding up expectations in today’s first sealed section, the question wasn’t put about the $40 million claim against Westfield by a property developer in the inner western Sydney suburb of Burwood, nor were the Hill brothers sighted at the meetings of Westfield Holdings, Westfield Trust or Westfield America Trust at Sydney’s Entertainment Centre today.

In fact it was a quiet affair. A total of 21 questions, mostly centring on tax and pre-CGT investments (that’s pre September 1985) and what happens when the merger goes through.

How pathetic. Surely someone could have fired up over Frank Lowy’s outrageous paypacket or the fact that Lowy family dividends will soar from $40 million to $160 million thanks to this deal. None of the investors who spoke opposed it and all the questions were predicated on the basis of the deal getting up.

And of course it did, overwhelmingly, with over 97% of proxies in Westfield Holdings cast in favour, and slightly lesser numbers (but still more than 92% cast in favour in the Westfield Trust and the Westfield America Trust. Strangely, the proxy results have still not been lodged withe the ASX four hours after the meeting finished.

A giant with $34 billion in assets has now been created, subject to the approval of the NSW Supreme Court, and then it’s off to conquer the world.

So what did unitholders or shareholders talk about, after tax? Well, there was one nice question about whether Westfield would follow News Corp and head for New York. “No intention”, said executive chairman Frank, but couldn’t talk definitely about the future. But conditions here would have to change a lot, he said, for any contemplation of a such move to be made.

Any takeovers, asked another shareholder. “None that we can talk about” opined the chairman, in an informal, chatty way.

And a numbers of other queries about technical matters related to the merger, with the last from a unithholder in WAT wondering if the trust was valued properly. Which brought a wry smile from chairman Frank and a long explanation from son Peter via video link from the US which said well, yes, it sort of was “just look at the way the prices in the market have gone” type of reply.

And that was it. Tea, cake and biscuits afterwards and Frank and the board were away. In just over two hours on a cool but sunny Friday morning in Sydney.

So what came out?

The new company will trim the boards of the three groups. Currently there a total of 18 common or individual directors. That will contract to an indeterminate number. Executive chairman Frank said he couldn’t pre-empt further discussion of the issue by the boards, by saying anything more.

But seeing there was 12 who managed to attend the meeting (and were seated on what looked the base for a boxing ring in the middle of the Centre), that seems like a good number.

Naturally there will be a block of four Lowys, Frank, Pete, Steve and Dave. And, of course, the confidante and financial brains, Stephen Johns, would have to be on the board.

But if, as Frank promised, there would be a majority of non-executive directors, then the going gets tough. You’d have to have the Fairfax board there. Sorry, Dean Wills, David Gonski and Fairfax CEO, Fred Hilmer. Some, if not all would make it.

The member for the Reserve Bank. Sorry, again, Jillian Broadbent and her former BT boss, Rob Ferguson. Don’t know about them. John Studdy, a well known ‘professional’ independent director, likewise, seeing he’s looking a bit long in the tooth.

Two notable absentees were Optus Bob Mansfield and Gary Weiss, who were both overseas. You’d have to bet on Gary Weiss getting a gig somewhere because he is one of the sharpest brains in Australian business. But Bob could probably be retired off given the Telstra mess.

Carla Zampatti. Hmmmm, a flower of the Sydney social-rag trade scene, but a good business person. Yes, probably. Frank said the new company would conform with all the corporate governance guidelines of the ASX, except one. Him. he will remain executive chairman despite now only owning 11 per cent of the business.

And despite that breach, there was no criticism from the few hundred assembled shareholders. No one even pointed out that the board was stacked with Frank’s mate and there would not be a majority of “independent” directors if you consider friends or 10 years of service make you “affiliated”.

An end of an era, yes, the start of a new one, yes, and a lot of affection for the man.

But no sign of the combative Frank who was upset at ACCC chairman, Graeme Samuel claiming victory over Westfield on the contentious issue of alleged ‘heavying’ of a small retailer in a Westfield shopping mall in Brisbane.

Frank wanted to put the gloves on and go again with the ACCC, which is remaining politically mute to the Westfield chairman’s calls.

And looking at the Lowys and the proposal, and recalling the arguments over the proposed News Corp move to the US, you got the feeling that there’s a big element of the Lowy family organising its estate and succession questions.

Those two points remain the most fascinating about the family with Frank looking a fighting fit man well into his late middle age but showing no signs of slowing or giving up the ghost.

Property guru Greg Paramor told the AIA conference on the Gold Coast last week that Frank had told him his goal was to become “the Rupert Murdoch of shopping centres”.

He’s already done that, now he has one last stated goal to achieve – to become the richest man in Australia. This deal certainly won’t hurt as his annual dividend and salary cheque will now go from less than Kerry Packer to almost double.

And Frank’s lifestyle doesn’t cost $100 million as Kerry’s does when he has a losing streak at the casino tables.

Dodgy disclosure over Westfield merger

Subscriber email – 27 June

We noted in the last sealed section how odd it was that the votes from the big Westfield merger meeting on Friday morning had still not been released to the market at 4pm when the meeting finished at midday. For this reason, none of the Saturday papers bothered to look at the numbers as they were only released on the ASX at 4.45pm.

And what a sketchy set of numbers they are. The Corporations Law requires that listed companies release four different proxy figures: for, against, abstain, undirected. Ideally the last category is broken in two so that “undirected proxies held by the chairman” is disclosed separately. Good old Westfield boss Frank Lowy has decided that he only needs to reveal the final for and against – and even then he’s been selective and inconsistent.

Shareholders in Westfield Holdings, the stock where Frank has his $2.5 billion invested, were always going to be the biggest supporters of this $27 billion three-way merger because they got the most out of it – as is best demonstrated by the fact that Lowy family dividends will soar from $40 million to $160 million a year. Therefore, it came as no surprise that 378.7 million Westfield Holdings shares were voted in favour and only 1 million against. That’s an impressive 99.73 per majority and even when you strip out the 161 million Lowy family shares, 218 million shares (55.6 per of the total non-Lowy shares on issue) were voted in favour of the deal by neutrals. A landslide in anyone’s language.

And to demonstrate the strength of the majority we were also given the additional information that 10,371 Westfield Holdings shareholders voted in favour and only 116 against – a tiny minority of 1.12 per cent. We know there was plenty of telephone soliciting but that’s still not a very good penetration rate given there are more than 55,000 Westfield Holdings shareholders.

However, there was some opposition to the deal from unitholders in Westfield Trust and Westfield America Trust but for some reason we were given their votes in terms of “value” and there was no disclosure of how many unitholders voted.

This is the most bizarre EGM or AGM voting result we’ve ever seen. The law is blatantly ignored, we still do not know the pre-meeting proxies, only one of the three companies revealed the number of voters and we’ve seen this new previously unused figure of “value” used. So what share price was used to reach this value?

Take Westfield America Trust as an example. We’re told that units worth $5.247 billion were voted in favour and $249.7 million opposed it. That was a no vote of 4.54 per cent. Assuming we’re using Friday’s closing price of $2.37, this means 2.214 billion units were voted in favour and 105.5 million against. However, if you exclude the 554 million Westfield America units owned by Frank’s Westfield Holdings, the neutral yes vote was 1.66 billion shares or only 44 per cent of the neutrals. A large block of 1.46 billion units – 38.6 per cent of the total – weren’t vote by Westfield America unitholders. Was this a protest?

This contrasts with a no-show of only 31.5 per cent at Westfield Holdings at 32.3 per cent at Westfield Trust. It looks like Westfield America Trust unitholders have got the worst of the deal and the protest came through with a much higher no vote and a higher no-show.

Given that the Australian dollar plunged against the US dollar after the merger was announced, it does look like Westfield America Trust unitholders might have been short-changed in relative terms.

Check out these disclosures for yourself by going to Friday’s ASX announcements here and scroll down to 4.45pm for the three different Westfield announcements. However, it might be simpler to go to the direct link for each as follows:

Westfield Holdings
Westfield Trust
Westfield America Trust

Now, compare that with the AMP AGM last year. See how AMP give the pre-meeting proxies and then the final poll result. This way you can see how the vote changes when undirected proxies and votes cast at the meeting are included. We’d love to know how many Westfield shareholders just signed the form and sent it back – therefore giving chairman Frank the proxy.

If the ASX don’t force Westfield to release the full figures on Monday then they are even worse than we’ve always maintained. What sort of corporate democracy do we live in and isn’t it time the AEC took over listed company polls?

Westfield explains the strange voting release

June 30 subscriber-only sealed section

Westfield spindoctor Matthew Abbott writes:

“I’ve been out of the office for a few days and on my return, your report of Friday night about the Westfield restructure vote was brought to my attention. Even my non-lawyerly eye could pick out a couple of mistakes so I asked our general counsel to draft a few points in response to your yarn. You can use it as you wish.”

By the Westfield general counsel

The proxy results, showing the information you refer to, was shown at the meeting. The slide was released to the ASX on Monday morning.

The published result was the final voting result on the poll, including the proxy vote. Unlike ordinary resolutions which are decided after taking account the proxy vote and show of hands at the meeting, all 7 resolutions were voted on by a poll. The result of that poll is audited by Ernst & Young and then announced to the market. Given that the poll includes the proxy result and converts the discretionary votes into “for and against”, it is a much more relevant disclosure to make to the market.

The information on the number of Westfield Holdings shareholders who approved the resolution was published because the Share Scheme Resolution (required in accordance with Section 411 of the Corporations Act) requires both a majority by number of those voting and at least 75% of the votes cast on the resolution (see page 21 of the Westfield Holdings Overview). The information was published to evidence compliance with both requirements. The resolutions for Westfield Trust and Westfield America Trust required a 75% majority of votes and the information on the number of shareholders voting was not relevant in that context.

For a poll for a managed investment scheme (ie. Westfield Trust and Westfield America Trust) each member has 1 vote for each dollar of the value of the interests they have in the scheme: Section 253C (2) of the Corporations Act. Section 253F sets out the basis for valuing the interests of those with an interest in the scheme. The announcement by reference to value is consistent with the poll requirements in these provisions. Again, that result was audited by Ernst & Young.

The unit price used to calculate the value of the interests of members was the last sale price on the day preceding the meeting. This is the price specified in Section 253F (a) of the Corporations Act. Again, it is audited and confirmed by Ernst & Young prior to the meeting.

Westfield Holdings did not vote its interest in Westfield America Trust at the Westfield America Trust meeting.

CRIKEY: Check out our original coverage here and the recent Westfield Holdings ASX announcements here. Westfield Trust and Westfield America Trust also released the full proxy figures as we demanded in our Saturday edition. The undirected proxies weren’t quite as high as we predicted and the figures were as follows:

Westfield Holdings: 2.84 per cent undirected with primary vote 96.89% in favour and 0.27% against.
Westfield Trust: 6.35 per undirected with primary vote 92.62% in favour and 1.03% against.
Westfield America Trust: 2.07% undirected with primary vote 93.38% in favour and 4.55% against.

You can’t really mount an argument that there was any meaningful opposition and even if the undirected proxies had been voted against the merger, it would have still been approved by more than 90 per cent of shares voted. When a merger deal sends the value of three stocks up by $4.4 billion, it is a big call to expect shareholders to object.

Peter Fray

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