Geelong Football Club President Frank Costa enjoyed his greatest moment in the corporate sun on Saturday when The AFR produced a glowing profile of the produce king whose fruit and vegetable empire is now reputed to be Australia’s biggest with turnover of $1.5 billion a year.
However, the paper missed a rather startling and disturbing development that unfolded on Friday afternoon when Costa’s companies called an extraordinary general meeting of Chiquita Brands shareholders to dump independent director David Bayes.
Costa joined up with Timbercorp last year to bid $109 million or 73c a share for the company but only managed to secure 80.75%. Instead of coming back with a higher offer, Costa is blatantly oppressing minority shareholders. He wants to delist Chiquita and is proposing an excessive rights issue of up to $40 million as part of the process.
Costa’s crew run a line that Bayes doesn’t have the right experience given his background in the franchise industry but Bayes gets a right of reply on pages 10 and 11 of the notice and clearly explains the motivations of his oppressors. Someone needs to represent minorities to ensure value is not leeched out of the company through related party transactions and transfer pricing.
The notice also proposes a change to the Chiquita constitution which would allow the compulsory sale of smaller shareholdings – another heavy-handed step to tighten Costa’s grip on the company. There’s also a proposed name change to Costa Exchange Ltd – all of which will be voted on the Friday before the Melbourne Grand Prix when no-one will be watching.
Costa had an unfortunate brush with democracy in the 2004 Geelong City Council election when he financially backed a Labor-connected ticket which eventually led to one councillor being charged for not disclosing donations.
Given the extraordinary ousting by the members of Carlton President Graham Smorgon last week, Costa should be more sensitive about the need to be seen to do the right thing.
Taking on the Mafia in the Melbourne produce markets at the behest of Coles directors Solly Lew and Lindsay Fox in the early 1990s was a brave and noble thing to do, but the king of Geelong should get out of the bearpit and behave more appropriately when dealing with a public company takeover in 2007.