Is anyone else still trying to work out why Macquarie Bank appears so
paranoid on this question of their influence over Tasmania’s
Beaconsfield Gold Mine? When the Millionaire Factory pulled the plug
on mine operator and controlling shareholder Allstate Exploration
in June 2001, the outgoing directors were required to fill in a
detailed questionnaire as part of one of the administrator’s reports to
creditors. Have a read of all their answers here.
Questions 48 and 49 were: When did you first realise that the company
might have to go into administration? What caused you to realise this?
The managing director at the time, Patrick Scott, provided the
following written answer: “I was advised by Mike Jeffries (another director) that he had been
informed by Macquarie Bank that MBL were only prepared to provide
further support to Allstate if the directors agreed to appoint Michael
Ryan of Taylor Woodings as an administrator to manage the affairs
of the company.”
And that’s exactly what happened. Macquarie nominated Michael Ryan.
So how does that tally with Macquarie’s requested Crikey apology from
Clayton Utz that included the following?
- Macquarie did not appoint the administrator of Allstate
- Macquarie does not sit on the joint venture committee and has no role in relation to the control or management of the Mine
Strictly true in a legal sense, but the real world perspective from the
managing director of a failing company suggests it was indeed the
bankers who were calling the shots and exercising plenty of influence.
Then you have question 60: What do you consider were the causes of the
failure of the company? Patrick Quinn is very frank about Macquarie’s
role once again:
The subsequent withdrawal of support by Macquarie Bank,
Allstate’s bankers and only secured creditor. MBL had agreed in October
2000 to lend additional money to Allstate to finance Allstate’s share
of the rectification works on the plant. This additional facility was
made on condition that Otter (Allstate’s largest shareholder) support
Allstate’s share of the operating costs of the Beaconsfield Mine Joint
Venture, and that Allstate substantially re-arrange its gold forward
book and principle finance facility to MBL’s advantage. In hindsight,
the terms of this additional facility proved too onerous, both in terms
of of the cost of the additional facility and timing of the repayment
schedule. It is my understanding that MBL regarded its credit risk to
Allstate as part of an overall exposure to the Otter Gold Mine Group.
MBL is Otter’s banker and has a significant gold hedging arrangement
(unsecured) with Otter. As such, MBL was always in a position to exert
significant pressure on both companies.
Doesn’t all of this stack up to substantial influence? I’d be very
surprised if Macquarie didn’t have to approve some of the expenditure
required to perform the current miracle saving those two trapped miners
at Beaconsfield. If so, they deserve heaps of credit for adopting a
“whatever it takes” approach for all the right reasons.