Former Labor heavyweight Martin Ferguson was already sailing close to the wind, taking up a lucrative advisory position with peak oil and gas industry lobby group APPEA last October, just six months after quitting as energy and resources minister (the lobbying code of conduct requires an 18-month cooling-off period for ex-ministers).
Now coming under scrutiny is Ferguson’s role as head of natural resources for Seven Group Holdings — a position he took up at the same time as the APPEA role — as billionaire executive chairman Kerry Stokes moves into the next phase of his brutal takeover play for listed minnow Nexus Energy.
As energy reporter Matt Chambers pointed out in The Weekend Australian, Nexus got a favourable retention lease over the Crux gas field in the Browse Basin off Western Australia in February 2013, when Ferguson was resources minister. The 2013 retention lease was in line with the federal government’s general policy to encourage rapid oil and gas development — to “use it or lose it” — but it also, as Chambers wrote at the time, “gives prospective buyers of the Nexus stake the potential for faster returns than if the gas was processed through [nearby gas field] Prelude”.
Fast forward seven months and lo and behold, the former energy minister popped up as the Seven Group’s new head of natural resources. There was no mention of oil and gas at the time of the appointment — instead, there were hints Ferguson’s main focus would be on Westrac, Seven’s Caterpillar operation.
Ferguson would report to Don Voelte, the former Woodside boss who in June 2012 was a surprise appointment to succeed David Leckie as CEO of Seven West Media, sending its shares tumbling. Re-reading the coverage when his appointment was announced, it seems there was zero speculation that Voelte — who a year later took over from Peter Gammell as CEO of Seven Group — would take Seven into oil and gas. A clue was given at last year’s Seven AGM, when Voelte told shareholders energy was one of a handful of sectors the company would look at buying into.
Voelte was appointed chairman of Nexus, run by his former sidekick at Woodside, Lucio Della Martina. It’s a long story, but suffice to say Nexus was undercapitalised and undervalued and, with loans falling due and no buyers for its major assets, entered 2014 increasingly distressed. Seven’s recommended low-ball bid — at 2c a share just a third of the prevailing price and valuing Nexus at just $26 million, well below reported net asset backing of $160 million and the prevailing share price — was unveiled at the end of March, six weeks after Voelte had stepped down as non-executive chair of Nexus. Nexus and Seven said Voelte recused himself from any role on either side of the bid, but he could not escape the appearance he was chronically conflicted, as has been widely canvassed, including by Crikey here.
Voelte’s role stuck in the craw and might have been a factor in last week’s extraordinary rejection of Seven’s bid by shareholders, who chose to step off a cliff rather than take Stokes’ coin. Nexus directors duly put the company into administration, and the first creditors’ meeting is next Tuesday.
Having extended Nexus some $40 million in bridging finance since its bid was unveiled, Seven is now expected to use its position as secured creditor to try to win control Nexus from the administrators.
The market seems unconvinced. JPMorgan’s analysts wrote on Friday the strategic rationale is missing, as Seven “does not have any operational experience running resources projects, and we believe there are substantial capital commitments required to secure value”.
Poised to strike are Stokes, Voelte and Ferguson — whose business career is flourishing, with seats on the board of British Gas (whose $20 billion Queensland Curtis LNG coal seam gas export project he approved in 2010), and University College London.
To recap, here’s a handy timeline:
- June 2011: Don Voelte retires as Woodside CEO after seven years
- May 2012: Lucio Della Martina appointed Nexus CEO
- June 2012: Don Voelte appointed CEO of Seven West Media
- December 2012: Voelte appointed chairman of Nexus Energy
- February 2013: Martin Ferguson awards Nexus favourable Crux retention lease
- March 2013: Ferguson quits as energy minister after Kevin Rudd’s failed leadership spill
- May 2013: Ferguson announces retirement from politics
- October 2013: Ferguson appointed to head natural resources at Seven
- December 2013: Seven working up undisclosed Nexus bid; Voelte recuses himself
- February 2014: Voelte steps down as chairman of Nexus
- March 2014: Seven unveils Nexus bid
- June 2014: Nexus goes into administration; Seven poised to take control?