Crikey has unearthed Australia’s newest billionaire, Brisbane-based Terry Peabody, and what a colourful business career it has been.
From the December 29 subscriber email
Crikey recently spent a night at the spectacular Craggy Range winery in New Zealand’s Hawkes Bay. It was built and developed by Terry Peabody, a Brisbane boy who is arguably a billionaire but has no public profile in Australia.
Check out the Craggy Range description of the Peabody family here. Here is one of the few mentions that Terry Peabody gets in the media where it is claimed he has invested $65 million in the Craggy Range business.
Peabody is someone who made his first fortune out of fly-ash. Now he has businesses all over the world yet the Australia media have largely missed him. Can anyone help us tell more of the Terry Peabody story because we were absolutely blown away by the extravagance of what he has developed at Craggy Range?
From the December 30 subscriber email
It appears that Crikey has stumbled upon one of the best kept secrets in Australia – Terry Peabody, the only Australian billionaire who is not a household name!
There are two reasons for this – firstly Terry Peabody’s wealth is spread around the world and held in unrelated companies so that you can not track connections through chains of subsidiaries or holding companies and trusts.
Secondly, because TP prefers to keep a low profile and does not talk to the press except in the form of PR material such as you have seen in regard to the NZ Craggy Range wine business, where he tells only what he needs to.
This is not to say he is a recluse. He is quite well known in Brisbane business circles and he and his wife have in the past been very active in some charities, for example the Royal Women’s Hospital Foundation. But he simply does not discuss his personal affairs or wealth with anyone and he uses separate private accountants in Australia and other countries who have no direct contact so none of them have any more than a vague idea of his holdings in other countries.
His businesses are vast now but the best story is how it all began in NSW in the 1960s and 1970s.
Terry discovered that fly ash, the waste from coal-fired power stations which can be used to reduce cost and improve strength in concrete, was being dumped at a substantial cost to the then Government electricity generating authorities. He made a deal to take the fly ash away for free (have I got a deal for you!) in return for which he was given the rights to all fly ash from all power stations forever, thus locking out any potential competitors and ensuring that customers had only one source of supply. Eventually, one of the major concrete suppliers (I think CSR) got sick of being gouged and bought him out.
Terry Peabody returned to his birthplace of North America in the early 1970s to discover to his delight that no-one there was doing the same thing so he repeated the deal on both the East and West coasts of USA.
He came to Queensland with second wife Mary in the mid 1970s and discovered that CSR had not had the foresight to lock up the business in Queensland because they were only concerned with their major operations in NSW. So Terry offered Joh Bjelke Peterson the same wonderful deal (how many times can you be this lucky?), settled in Brisbane, and started to make his third fortune. He later expanded the same business model to Manila as a base for South East Asia.
We’ll have more on our newest publicly known billionaire tomorrow.
From fly-ash to trucks
From the December 30 sealed section
Australia’s newest publicly noted billionaire, Terry Peabody, has had a very interesting career as this contribution from Big Mack suggest:
Terry Peabody is a big fish in the Australian trucking industry. In 1991, he bought into a Canadian truck manufacturer, Western Star. He still owns its operations in Brisbane, but it no longer manufactures big rigs here.
Peabody realised the global heavy vehicle industry was consolidating and tried to become a player by buying Orion Bus Industries in 1995 and struggling Pommy truck builder ERF in 1996. The latter gave him a platform to expand into Europe.
But he also knows when to bail out. Western Star makes traditional long nose big rigs and was still small fry in the global truck game, so he sold it to the DaimlerChrysler empire in 2000. ERF was also sold to German truck builder MAN, which used ERF cabs.
MAN subsequently complained of fraud associated with the sale and claimed GBP300 million from Western Star’s new owner in damages. It alleged that ERF’s accounts and financial statements were misstated.
DaimlerChrysler then filed a contribution claim against Ernst & Young, ERF’s auditors, with the London Commercial Court in the second quarter of 2003. The legal wrangle is yet to play out in the courts.
Peabody kept a strategic stake in Australia by retaining the distributorship for MAN and Western Star trucks. This is inconvenient for the local DaimlerChrysler business, which has its own distribution network for its trucks here.
Pozzolanic Industries was sold to Queensland Cement Limited in 1987, which comprised of the fly ash company and a bulk carrier. Peabody clashed with the ATO when the float and restructure Pozzolanic became a landmark High Court test of anti-tax avoidance rules.
Peabody also battled with the Australian Taxation Office (ATO) for years in the late 90s. The ATO suspected he had hundreds of millions invested in a tax-haven in the British Virgin Islands, but Peabody only declared $74,000. The Federal Court kicked the case out as a “fishing expedition”.
Peabody’s interests are now part of Brisbane based Transpacific – an environmental waste management company. The Transpacific Group is the vehicle for a range of companies including the Zappaway truck company, and the Western Star/MAN distributorships.
Peabody goes public
Meanwhile, a fund manager writes:
You might be aware that Terry Peabody is looking to float his very interesting collection of niche waste management businesses and his Western Star truck franchise some time in the new year. He flew a lot of fund managers up to Brisbane in early November to see the assets. Macquarie and UBS are involved and no-one knows the structure and pricing.
The trucking and waste management man
From the January 5 sealed section
Crikey continues its series on the previously unknown Brisbane-based billionaire Terry Peabody:
After White Trucks finally collapsed in the early 1980’s, Terry Peabody, with two partners who had been key employees of White, set up Western Star Trucks Australia as a licensee of Western Star, which had been the Canadian subsidiary of White Motor Corporation.
In the mid-80’s he floated the Queensland fly ash business (Pozzolanic), retaining a controlling interest, and then sold the public company to QCL within a year (QCL had got sick of being gouged – the float was only to force them to pay Peabody’s price). At that time the best estimate of his total wealth would have been around $200-300 million.
Peabody also owned a number of other businesses in Australia, including companies related to the concrete industry such as manufacturers of cement and concrete transport equipment (check Trans Pacific Industries). One of these companies which specialises in the collection and treatment of grease trap waste was unfortunately involved in an incident several years ago when a large number of cattle in a Queensland feedlot died of botulism poisoning after being fed processed waste material and another (Zappaway) was accused of dumping grease trap waste into storm water drains or roadside gullies.
In about 1990, Peabody bought the Canadian Western Star Trucks company, the manufacturer of Western Star Trucks, and later the Orion Bus company, the largest producer of buses in Canada, and in 1996 bought ERF trucks of UK. The whole lot was bundled together and floated in Canada, with TP retaining 42% (at least that is what was disclosed).
In 1998 (I think) Western Star and ERF were sold to Freightliner, the USA truck subsidiary of DaimlerChrysler, who immediately on sold ERF to MAN. Within a year, MAN sued DaimlerChrysler over “accounting irregularities” – it was claimed that creditors were understated and debtors were overstated. The ERF transaction made a profit of 70 million pounds sterling and the Western Star sale was several hundred million US dollars so Terry had made his fourth and biggest fortune.
Terry still owns the distribution business for Western Star and MAN trucks in Australia, which is still headquartered in Brisbane, and a large amount of industrial property in Brisbane (and probably many of the other businesses he has acquired here over the years). He has probably just returned from his ski lodge in Whistler, which is where the family traditionally spends Christmas.
Terry Peabody is a very intelligent, astute and determined businessman, very charming and persuasive when he wants or needs to be, a great deal maker, and absolutely ruthless when necessary. Ultimately, his main loyalty is to his immediate family. Cross him at your peril.
From the January 7 subscriber email
An anonymous businessman in Brisbane writes:
During the late 1980’s, secretive billionaire Terry Peabody owned a majority share of a landmark restaurant which was called “The Fountain Room” because of its location below the then new Queensland Art Gallery, overlooking the spectacular but malfunctioning fountain in the Brisbane River. Along with the restaurant came a pontoon mooring for TP’s 18 metre motor yacht, called the “Fountain Princess”.
The restaurant was known irreverently to staff of the Peabody companies as “the company canteen” because all business entertaining was carried out there. It is rumoured that when the staff Christmas Party was held at the Fountain Room, staff were required to pay for he privilege of attending.
Well, you don’t get to be a billionaire by giving money away, do you? And he did start with nothing, so he knows the value of a dollar.