Unlike the United States, Australia does not have a proud history of “greenmail”. Well, that was until yesterday, when it was confirmed that Nicholas Bolton, the 27-year-old proprietor of Australian Style Investments has collected $4.5 million from Thiess to ‘sell’ his votes in yesterday’s BrisConnections unit-holders meeting. A meeting which had been demanded by Bolton himself.

Bolton’s greenmail attempt was a different play on the traditional corporate stand-over tactic. In the United States, “greenmailers” would traditionally acquire a large minority stake in a company (generally between 5 and 20%) which is subject to a takeover offer. The greenmailer would then threaten to vote against the deal (or perhaps pose as a “white knight” and offer to sell their shares back to the company). A successful green-mailer would later sell their shares for a premium to the prevailing share price.

Well-known corporate raider, Carl Icahn, whose personal wealth is believed to be approximately US$9 billion, famously launched a US$8.1 billion tender offer for Phillips Petroleum in 1984 with debt-backing from Michael Milken’s, Drexel Burnham Lambert. Icahn did not succeed in taking over Phillips, but was paid US$25 million by the company as compensation for his “expenses”. After his Phillips gambit netted him “at least $US50 million” (including a premium paid for his shareholding), Icahn claimed “I’m happy the shareholders benefited. But I’m no Robin Hood. I enjoy making the money.” The billionaire later tried a similar tactic with TWA but was unsuccessful, eventually being forced to acquire the airline (the TWA battle was later partially dramatised in the movie Wall Street).

Sadly for corporate raiders, as Forbes noted back in 2006, “thanks to tightened board rules, a post-Sarbanes Oxley pro-shareholder sentiment, and in several cases, state laws outlawing greenmail, raiders now have to build a broad shareholder consensus to get their goals accomplished. As of the end of 2005, 53 large US companies had adopted ‘anti-greenmail’ provisions, according to Institutional Shareholder Services, including GM and Disney.”

Greenmail has traditionally been largely restricted in Australia, with the Chapter Six of the Corporations Act containing provisions which prevent bidders from paying a higher price to certain shareholders within four months of an offer (known as a “minimum bid rule”). For example, an acquirer cannot pay one shareholder $10.00 per share for their 19% stake and soon after offer remaining shareholders $5.00 per share. Further, Australian corporations laws require shareholder approval for selective buy-backs of shares, meaning that it would be unlikely for a greenmailer to be able to achieve a “premium” price for their share bloc.

As a result, Bolton’s actions do not represent a traditional greenmailing. Bolton did not actually sell his interest for a premium back to the company, instead he only sold his voting rights to Thiess, which happens to be a related party to BrisConnections (a Thiess representative sits on the BrisConnections board). Of course, unlike most greenmailers, Bolton didn’t escape scot-free, yet. Currently, the university drop-out is still liable to pay a $77.5 million call in a fortnight unless a deal can be worked out between the Queensland Government and underwriters, Macquarie Bank and Deutsche Bank. It is fair to speculate however that Bolton is aware of some sort of reprieve to be offered to unit-holders, otherwise, his actions in retaining his units remain mystifying, even if the $4.5 million bounty is being paid to the parent company of ASI, known as Australian Style Holdings.

Bolton has certainly not made a great deal of friends in the past 24 hours. Jim Byrnes, a former associate of Alan Bond who was sentenced to four months jail in 2007 for smashing the window of a solicitor’s office with a baseball bat is believed to be less than impressed at Bolton’s moves, claiming that the young entrepreneur had “just ruined his corporate life forever [and that he would] trust Mr Bolton like I’d trust a rabbit with a lettuce leaf.”

Unless a deal is worked out in the next fortnight, Bolton’s Australian Style Investments may be left with a very messy bankruptcy proceeding and very angry enemies.