If John Howard is really interested in maximising the sale proceeds from T3, he would withdraw the nomination of his mate Geoffrey Cousins from the board.
The damage that has been done is already enormous and it will literally poison the water during the whole selling process. In PR terms, it is an absolute disaster, as yesterday demonstrated.
Now that the Telstra board’s unequivocal concerns about Cousins are in both the notice of meeting and the prospectus, it will be impossible to avoid an ugly battle at the Telstra AGM on 14 November.
This is literally the day before the institutional bidding process begins and will no doubt dominate the headlines as funds from around the world sharpen their pencils. Clearly, this is a value-destroying situation that should be avoided by compromise.
However, like in any negotiation, there needs to be some give and take. Donald McGauchie is clearly not a long-term solution as chairman of Telstra.
Former AMP and Mayne chairman Peter Willcox, who only joined the Telstra board earlier this year, has the pedigree to take on the role and this should be expedited.
However, there is a danger that replacing McGauchie would imperil the Sol Trujillo regime and Sol is not known for sticking around long at his recent gigs.
In order for the PM to back down, he needs to be given a nod and wink that McGauchie isn’t long for the world, although this probably can’t be announced in the short term.
But there’s another very important PR gesture that could be embraced in a settlement. It was raised by Kerry O’Brien when interviewing Nick Minchin last night:
KERRY O’BRIEN: The appendix to today’s prospectus reveals that Telstra’s managing director, Sol Trujillo, does not own a single share in Telstra. What signal does that send to investors, that the managing director doesn’t have the confidence in his own company to own a single share?
Good point so here’s the peace deal that will potentially add at least 10c to the T3 sale price:
DRAFT SETTLEMENT ARRANGEMENT
Protaganist A: The Government. Agrees to withdraw nomination of Geoffrey Cousins
Protaganist B: Telstra board. Sol Trujillo agrees to personally invest $5 million in T3 and express confidence about the future operation of the board.
C’mon boys, grow up and smoke that peace pipe now – for the sake of all taxpayers.