Daily Archives: March 2, 2009

GURGLER: Fairfax falls after desperate cash dash

fairfaxdrowning Left-wing newspaper publisher Fairfax Media has bowed to pressure from bankers and bond-holders, raising hundreds of millions of dollars to pay down a small portion of their $2.5 billion debt mountain early. It also announced on Friday that it was sacking its CFO for getting them in such a financial mess.

The market has continued to express concern over the company’s future, selling down the company to new lows.

The desperate move came despite only days earlier saying the company had no extra need to raise cash. VEXNEWS and other observers were able to prove that wrong by pointing to their own rapidly maturing list of creditors. The market did the rest, selling the companies shares heavily.

Regulators are believed to have interviewed senior Fairfax executives over allegations they deceived the market by misrepresenting their need for more funds.

The effect of selling so many new shares to existing shareholders is a massive dilution of their biggest shareholder – John B Fairfax – who is understood to have a huge debt-servicing issue of his own and was not in a position to buy any more shares than the ones he’s currently stuck with.

The company made a rights issue to its existing shareholders and John B Fairfax was simply unable to meet the call for funds. The effect of this will be dilute his shareholding considerably and leaving the underlying value of what’s left considerably diminished. If he’d had the money available John B Fairfax would have needed to stump up $95 million to maintain the percentage of the company he had. He’s going backwards. Fast.

He had hoped that by agreeing to this huge dilution, his bankers would be pleased by a rise in the share price after the removal of some of the financial instability in Fairfax Media.

The market wasn’t buying it though, with the shares plummeting to 87.5 cents from an open 95 cents, its lowest level since the company was last in receivership in the early 1990s.

Market insiders say that John B Fairfax will struggle to stay within his own bank covenants with Fairfax Media below the 80 cent level. It’s not far off that. With further reports of softening in the advertising market hitting the company, it’s considered a minor miracle that Fairfax were able to raise any money at all.

It’s clearly just a drop in a very large ocean of debt, that seems set to imperil the entire company and drown its biggest shareholder.

The company – as currently structured – is living on borrowed time – and money.

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FIGHT NIGHT: Costello's ambitions threatened by a pro-Turnbull faction in his own state

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The looming Victorian Liberal Friday fight over their Senate preselections reveals that Malcolm Turnbull is now the clear beneficiary of  a permanent split in what was the Costello-Kroger faction.

Some say this could represent a very serious problem for Costello’s ambitions for federal party leadership.

KROGER-COSTELLO SPLIT
The split between the Kroger-Ronno and the Cossie-Fifield forces has grown with each passing day since Ronaldson did Turnbull’s numbers for him while Costello was supporting Brendan Nelson. It was also exacerbated by tensions over whether Krogerite Jason Aldworth or Costello-ista Julian Sheezel should replace Costello in Higgins if he left the seat, as was expected during most of last year.

Costello also blames Ronaldson – and former Ronno staffer now Turnbull media man Tony Barry – for leaking against him repeatedly. The former Treasurer told one supporter that Ronaldson’s activities were a “major reason” he stayed on in order to defy and smite him.

Former party president and power-broker Michael Kroger continues to support Ronaldson, creating what some see as growing strains between formerly best buddies Kroger and Costello. Some say they are no longer talking as they used to. Still loyal to Costello in Victoria are Senator Mitch Fifield (not due for election this time), front-bencher and former Cossie staffer Tony Smith and Higgins aspirant Julian Sheezel. But they are a much smaller group than the better organised Ronno forces.

FRIDAY FIGHT NIGHT
On Friday evening from 7pm, the Policy Assembly will select the ticket the Victorian Liberals take to the next election. Each position is elected separately, with #2 already dealt to the Victorian Nationals as part of the life-support programme for that party in decline. #1 will be elected first then #2.

Turnbull is strongly supporting his numbers-man Senator Michael Ronaldson who commands the loyalty of many Victorian Liberals, particularly it is thought Senator Helen Kroger who is believed to be firmly under him. They are frequently seen having very private chats in Chairman’s Lounge where the walls have ears. The Liberal Leader even wrote a reference for his aggressive and feisty Shadow Minister for this contest where most expect Ronno to be comfortably returned as #1 on the ticket.

Costello had previously committed to support incumbent Senator Julian McGauran who defected from the National Party after being hunted into exhaustion by preselection predator and state Nats Leader Peter Ryan.  He is believed to be still supporting McGauran but hasn’t necessarily brought all his supporters with him.

On Friday’s preselection fight night (doors of Centenary Hall locked at 7pm), it appears many of Costello’s voters will actually be supporting former Cossie staffer Kelly O’Dwyer’s friend Cate Dealehr.

TURNBULL-RONNO LOVE
On the other side of the Costello-Kroger split are the Senator Michael Ronaldson forces. Their candidate – as regular readers will recall – in any vacancy in Higgins when it was expected to arise last year was the wily Jason Aldworth, who works alongside various Labor identities at CPR lobbying firm.

One of their big players was Tony Barry who has recently left town to become a key adviser and media strategist to Malcolm Turnbull. Barry was the key factional operator for the Ronaldson forces.

It is that move – more than anything else – that is seen to have solidified the already strong connection between Turnbull and the Ronno forces.

Ronaldson of course had supported Turnbull over Brendan Nelson while Costello had supported Nelson in the leadership contest. Costello doesn’t like Turnbull and mutters darkly about having “lots of sh*t on him” relating to Turnbull’s business career where like every Sydney spiv on the make he knew how to cut a corner or two in his Maserati.

FOX LOOKING GOOD
Ronno’s troops – large in number – will turn-up and vote for Ross Fox, after they’ve elected Ronno as #1.

Senator Ronaldson would normally be expected to support his colleague Senator McGauran but is staying ominously silent while his troops strap bayonets to their rifles for Friday’s night attack. Ronno’s silence is seen as a kiss of death for McGauran.

Fox is a strong candidate on paper, an Oxford graduate, former staffer and currently a lobbyist for independent schools. His most important qualification might be his willingness to do what master-blaster Ronno directs him to do.

As a former staffer to John Brogden, the Liberal Left former NSW Opposition Leader, Fox is well connected among the bleeding heart leftistes who populate the moderate Liberal forces in Sydney.

Their equivalent in Victoria, the Baillieu faction forces are believed to be supportive of Caroline Kenny SC. But she is not a factional player, she’s an outsider candidate who is running a gender argument for her candidacy but is seen by most as positioning herself for another seat at another time. They don’t think much of Fox but prefer him to McGauran.

McGAURAN IN TROUBLE
That leaves McGauran, with a cheque written by Costello that when he tries to cash it will bounce like one of those brilliant $2 bouncing ball things I insist on buying on every admittedly rare trip to the supermarket.  His referee is Peter Bartels, the former Fosters CEO who is also head of the Higgins 200 Club and acts on the friendly instruction of Cossie.

McGauran has apparently worked over every last voter on the PA though. Travelling throughout the state, he has visited dozens of them, sat in their homes and whispered sweet nothings about how the Victorian Liberals need a conservative voice in Canberra to balance out the liberal ways of Sydney pro-choice Republican merchant bankers. Melbourne Liberals look at NSW Senator and Liberal Lefty Marise Payne very suspiciously and not just because she raises money from Italian organised crime figures but she appears to be more flamboyantly left-wing than anyone in the NSW Right of the ALP. She opposes the Free-Trade Agreement between the US and Australia for example.

Indeed, Imre Salusinszky at the Australian reported today some of the NSW Liberal Left are so wacky, they’ve taken up with the supposedly more moderate National Party.

An important part of McGauran’s pitch is that he can “deliver” DLP preferences, by reason of his family’s financial support for that party and its natural inclination to support the conservative chap. Insiders say though that McGauran is country conservative in that unreconstructed kind of National Party way, supporting rorts like the single-desk AWB wheat monopoly so some of the more ideologically pure Liberal free-marketeers will turn up their nose at him on those kind of grounds.

The best guess of VEXNEWS contributors and sources is that Ross Fox is most likely to win, on the back of a strong showing for Ronno.

That’ll remove one Costello vote and add one to Malcolm’s pile.

Future Victorian Liberal preselections are also likely to cause a great deal of disruption, with Ted Baillieu’s supporters likely to enjoy more say than the current Policy Assembly process after recent party reforms. Liberal insiders say that while Mitch Fifield is probably safe, Scott Ryan keen not be #3 again and Helen Kroger working flat out in close consort with Ronno and the Baillieu people keen to claim their own spot that competition could be very intense indeed.

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JAILED: Jake "The Snake" Della-Vedova gets four months prison

vexnewsprideful Convicted blackmailer Jake “the Snake” Della-Vedova has been sentenced by Court Court judge Hannan to four months jail.

The judge sentenced him to eighteen months jail but suspended 14 months of it for two years.

She told the defendant “Your actions were in my view callous and calculated. This was no momentary lapse in judgement.”

The threats – mainly by SMS – were made over two days, escalated in their menacing tone until the arranged cash drop-off where Victoria Police filmed the exchange of cash for camera memory card and then arrested the surprised Jake. He soon made full admissions, although many suspect his explanation that he was able to find the identity of the victim – who cannot be named because of a ten year suppression order – through a Google search to be somewhat implausible.

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