Allco founder David Coe and directors Gordon Fell and David Turnbull announced yesterday that they are standing down, but not leaving the company just yet, and the share price dropped 25% to an all time low of 60 cents.
Coe told the The Australian he was “personally devastated” by the recent events and in this morning’s Fin Review he blamed a “perfect storm” for Allco’s demise. How original! Blame the markets rather than himself and his fellow incompetents.
After all, Coe pressed ahead with the Rubicon deal when the market was criticising him and Rubicon boss, Gordon Fell, for doing a richly priced related partly deal that netted them millions of dollars in cash and Allco shares. Rubicon was valued at $320 million when bought by Allco back in December: it now has a value of $80 million.
There was no need for that deal to be done except to pump cash into Fell’s hands at a time when he was buying a $28.7 million house in Sydney’s Eastern Suburbs. Fell received around $28.7 million in cash from the Rubicon deal, and his house is now in his wife’s name, but he denies any link between the Rubicon sale and the house purchase.
Coe also got cash from the Rubicon deal and if he is genuinely interested in making a contribution, he could give it back to Allco. It would come in handy paying the redundancies for all the staff who will be leaving next week.
Both Coe and Fell claim not to have seen the credit crunch coming and that’s the biggest indictment of the duo. Either they were blinkered and didn’t understand what was going on or deliberately looked the other way. The crunch started in August and gradually accelerated during November into December. Dozens of US and European banks, mortgage groups and investors were writing off billions of dollars or closing due to the impact of the subprime mess and credit freeze.
To argue that they didn’t see it coming is specious nonsense from two men who are supposedly smart financial engineers. To me it looks like they were determined to get the Rubicon deal done no matter the cost and bugger other shareholders.