After 12 years under the leadership of managing director Neil Hamilton, listed investment company Chieftain Securities is about to be reborn with new management and a new focus on the energy sector.
After 12 years under the leadership of managing director Neil Hamilton, listed investment company Chieftain Securities is about to be reborn with new management and a new focus on the energy sector.
Chieftain shareholders will meet this week to approve a convertible note issue, the appointment of new directors and a change of name to Energy Investments.
The new team, led by investment banker Shane Doherty, is linked by its association with aspiring gas producer Sydney Gas, which is headed by some prominent Perth expatriates.
These include former Deloitte Touche Tohmatsu chief executive Domenic Martino, who chairs the Sydney company, and former Australian Securities and Investment Commission executive Dr Bruce Butcher, who is its managing director.
Mr Martino will provide the only continuity between the ‘old’ Chieftain and the ‘new’ Energy Investments. He is currently a director of Chieftan and will assume the role of chairman under the company’s new guise.
Under the restructuring plan to be put to Chieftain shareholders on Friday, Mr Doherty’s company, Lateral Nominees, will subscribe for a $1 million convertible note.
Subject to payment of a final distribution to Chieftain shareholders, the note will be converted into 131.4 million Chieftain shares, giving Lateral a 90 per cent stake.
The beneficial owners of the shares will be Mr Doherty’s family trust and Dr Butcher’s unit trust.
Chieftain shareholders will also be asked to approve the appointment of Mr Doherty (a former director of Sydney Gas) and Artur Burkner (a current director of Sydney Gas) as directors.
The new directors of Chieftain intend continuing its role as an investment company but with a focus on the energy sector, and plan further capital raisings as opportunities arise.
Chieftain shareholders will be hoping the new directors can send the share price on an upward trajectory akin to that of Sydney Gas, which has won investor support for its plans to develop coal seam methane gas deposits.
Sydney Gas has also been generous in rewarding its top staff for achieving key milestones.
Helped by equity options worth $560,000 and cash bonuses worth $300,000, Dr Butcher received total remuneration of $1.9 million last financial year while Mr Martino received $1.5 million.
The changes at Chieftain follow nearly two years of restructuring by the company, which decided in 2002 to sell its investments and return the proceeds to shareholders.
The strategy has been a clear success, with Chieftain share-holders obtaining a much higher return than if the company had continued normal trading.
Over the past two years shareholders have received distributions totalling $1.20 per share and the company still has assets of about 10.9 cents per share.
By comparison, when Chieftain decided to sell its assets, the company had a share price of just 40 cents.
Mr Hamilton, whose current roles include chairing Western Power, Sons of Gwalia, and labour hire firm Integrated, said Chieftain’s lack of size had always been an issue.
“The bigger these things are, the better spread of investments you have,” he said.
“But at the end of the day, the biggest disappointment was that we couldn’t get the market to rate the idea.”
Mr Hamilton said the role of providing development capital was now mostly handled by unlisted private equity funds.
He said Chieftain’s standout investment had been in equipment hire company Cockburn Corporation, which tripled in value before being sold to Brambles.