Melbourne company director and chairman James MacKenzie is having a tough time trying to be the teflon man of Australian business. He’s the chairman of Pacific Brands, the company that managed to upset everyone bar the Federal Opposition with its plans to sack 1850 Australian employees, deciding (thanks to McKinsey and Co) to quit Australian manufacturing at a time when the Australian dollar is at its lowest level for several years. You didn’t see him around yesterday when CEO Sue Morphet was passing on the bad news. He is also chairman of troubled Sydney property player Mirvac, which last week reported a $1 billion turnaround for the December half year and then on Tuesday slipped to a new all-time low of 76 cents, without an explanation or a query from the ASX. The shares recovered yesterday, rising 8.75 cents to 84 cents, also without a query or explanation from the ASX or the company for the two day price swing. He also forgot last year to tell the market that Mirvac’s former CEO had given seven months’ notice of a decision to step down. As if two highly active chairmanships of major struggling Australian companies weren’t enough, he’s also a director of Melco, the Macau gaming plaything James Packer was once so enthusiastic about. Melco has hit a succession of lows, there have been reports about bribery, corruption, money laundering and a story a month ago about how a fascinating number of high rollers from China ended up dead, missing or convicted once back in China proper. Perhaps MacKenzie and his good friend, Australian Super’s Elana Rubin (who’s a director of insurer, Tower Ltd), should have stayed on the board of small Sydney superannuation service provider, Bravura. Both quit late last year after a private equity deal with Ironbridge Capital fell over after one of the Bravura principals got mixed up in the Opes Prime debacle. Bravura this week reported a small rise in profit (as opposed to the losses at Mirvac and Pacific Brands) with shares rising half a cent yesterday to 19 cents, just 3 cents shy of Pacific Brands’ close of 22 cents, a fall of more than 37% as the market concluded the company had no future and was really in the hands of its banks. At that price, Pacific Brands is valued at $176 million by the market; it has debt of more than $900 million. The costs of cutting the jobs and closing the various local factories and offices will be what the company is currently worth: around $126 million. The claimed savings are $150 million. That will flow to the banks, not shareholders. And there was no mention of executive and board cost cuts. The sackings were made to keep the banks happy with a $330 million debt tranche due next year. In exchange for the cuts, the banks are giving PacBrands six months’ breathing space. The company could not afford to make the cuts and pay for them from its own resources: it only has $95 million in cash on hand. The banks will finance the redundancy and closure payments. These cuts have been around for some weeks: there were leaks to the Australian Financial Review on Monday and Tuesday about the closure of some brands by Pacific Dunlop, and suggestions of a capital raising.  As well, the Industry Minister Kim Carr said yesterday he had approached the company several weeks ago and asked if there was anything the Government could do — he’d obviously heard suggestions of cuts flowing from the Victorian business community’s chatter about the McKinsey investigation. But there was no disclosure.  It’s not the first time MacKenzie has been involved in belated or inadequate disclosure: at Mirvac last year, the former CEO, Greg Paramour revealed his resignation in July and said that he had told the chairman of his intention to step down in December 2007. But no announcement was made to the market in the interim. At Pacific Brands, the decision to sack staff was a hard one, but Mr MacKenzie left CEO Sue Morphet to take all the heat. You would have though he would have at least appeared at the press conference to give his support. A fair weather chairman? 

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Peter Fray
Peter Fray
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