Alinta in limbo as MBO solution sought

The Alinta Ltd management buy out has resulted in a massive amount of commentary this past week, much of it unflattering to those behind the move.

I must say, being a weekly newspaper does allow us to take a more considered approach to issues – while still remaining on top of the news itself through our free Daily Business Alerts email service.

So, as I have watched the vitriol pouring during the past week or so, I have wondered about the speed with which condemnation occurs.

So many damning comments, from all quarters – some educated, some not – which ultimately led first CEO Bob Browning and then ex-chairman John Poynton to quit.

Whether they resigned because they thought they’d made a mistake or because they didn’t want to be the focus of attack is a moot point.

In the end, most people I spoke to believe it was the right thing to have done.

But that is a separate and distinct issue from the MBO itself.

While many investors are venting because they feel betrayed, the MBO protagonists could rightly point to the rising share price if they hadn’t gagged themselves.

Those opposed to the MBO move might counter with the argument that that is what management is paid to do - maximise the shareholder value.

After watching Alinta closely for several years, I don’t think there’s any doubt that the management and the board have sought to maximise investor wealth.

In this case, I suspect it has been in the latest guise of that ongoing process – the announced consideration of splitting Alinta into two entities, one holding infrastructure assets, the other operating them – which may have been the catalyst for the MBO.

In examining all the options to put to shareholders, Mr Browning and the team may well have put an MBO into the mix, either from their own thinking or prompted by their advisers.

If the MBO looked attractive, what were they meant to do? Keep it a secret?

Last Tuesday’s announcement was simply the first public window into the operations that may have been going on for weeks or longer.

It is just one day, or at the very least just one week, in a long and complicated process.

At this stage we haven’t really had a chance to hear properly from the MBO team what they propose.

If they made mistakes, so be it.

There’s no doubt that many things could have been handled better – but then there is very little experience here on how to handle an MBO, so who can blame those involved for making some mistakes.

In my view, the need to distance the MBO team from the company must be weighed up with the very real cost of cutting their ties with the business.

Of course, there is probably little chance that any of them would have remained if the MBO had failed, but now there’s almost none.

What has emerged now is the case where Alinta will limp along until there is a successful conclusion to this process.

As an Alinta shareholder, there is no sentimental value to me in retaining shares if a good price is obtained, but there is real concern about what happens to the company if a deal can’t be reached.

As the editor of WA’s locally-focused dedicated general business newspaper, there will be a significant sentimental loss if the furore around the MBO results in the business being lost interstate – and potentially some top executives as well, with or without the company.

Firepower enquiries lead to a dead end

Another Western Australian company that has been engulfed in a blaze of publicity, albeit on the east coast rather than here, is the mysterious fuel technology player Firepower.

WA Business News first looked into this unusual Technology Park-based business about a year ago when it emerged as a major sponsor of the Western Force rugby union team.

Back then, and since, we could find out little about them, despite a growing array of sporting sponsorships.

Which was all a bit odd, given sponsorship is usually designed to attract attention.

Our lack of information was not for want of trying.

The paper trail was poor, with most of the business names posted on the company’s website being non-existent in Australian Securities and Investment Commission records, though they were variations that bore thematic resemblance to other entities that did have some Australian documentation.

There have also been endless messages left at the company’s offices, some as recently as December, when we were covering WA Supreme Court proceedings concerning a row over ownership of the company.

So it was a little surprising to find this mysterious company has now emerged to face a public examination, including a press conference apparently attended by Firepower’s CEO John Finnin, someone we didn’t even know existed.

The whole thing is, quite frankly, bizarre.