Alinta is a very different beast after the controversy of 2007.
THE appointments last week of respected directors Tony Howarth and Wayne Osborn mark a significant point in the turnaround of power utility Alinta Energy after the devastation of the global financial crisis.
Both directors have strong links to the old Alinta business, which was listed on the stock market until financial-engineering experts at Babcock & Brown won a controversial battle for the utility just a year before the GFC hit that heavily indebted group.
Babcock & Brown won a competitive bidding process against a Macquarie-backed management buyout led by CEO Bob Browning and included then chairman John Poynton and key management players Chris Indermaur, Stephen Pearce and Murray King.
Each has gone on to make some mark in the Western Australian business scene as Babcock & Brown’s various funds struggled under their huge debts and many of the old assets of Alinta were sold off.
Mr Howarth returns to a vastly different Alinta than the one he left in May 2006, retiring after six years as chairman and eight years on the board. One of Alinta’s first moves under Mr Howarth’s chairmanship was to appoint Mr Browning, signalling a change in strategy from the reign of former chief Phil Harvey who had come with the state-owned business.
These days, Alinta retains its old retail business in Perth, a handful of power stations and a small stake in the Goldfields Gas Pipeline. It has targeted retail growth in the eastern states and growth in its mining power assets – especially two power stations at Newman and Port Hedland – as its key opportunities.
Other WA assets are power stations at Cawse, Wagerup and Pinjarra.
Alinta’s former Perth reticulation assets, as well as similar assets around the South West, Kalgoorlie and Geraldton are now held by WA Gas Networks, which is controlled by Prime Infrastructure with DUET Group as a junior partner.
This is a far cry from the heady consolidation that occurred with Mr Browning at the helm, when the listed entity had embarked on a series of significant developments and audacious acquisitions to become a major national power player.
Mr Osborn had played some part in that. He headed energy hungry Alcoa of Australia, which teamed up with Alinta to build cogeneration power plants at Pinjarra, near the mining giant’s alumina refineries. The pair also joined the consortium that bought the Dampier-to-Bunbury Natural Gas Pipeline.
To most Western Australians, Alinta remains familiar because it still retains a major hold over the retail gas market in Perth, the business it launched when the WA government split the State Energy Commission and privatised the resulting gas utility in the 1990s.
But to many in business, Alinta will be remembered for the controversy that surrounded the management buyout, which became public early in 2007.
The MBO became a national issue as details about the proposal raised questions of governance. Most controversial was the role of Mr Poynton, because it was generally expected the chairman would remain as a representative of the shareholders.
Instead it emerged that the deal had been put together over proceeding months.
There was also significant pressure on the rest of the board, ultimately led by John Akehurst, to deliver a good deal for shareholders, many of whom had no wish to sell out of the utility company whose performance they loved.
However, in justifying its move the management team claimed that delivering the kind of value and growth that shareholders expected was no longer possible as a listed entity and that the only way to do so was through private equity.
They lost the bidding war and, not surprisingly, left the business shortly afterwards.
Private equity still controls Alinta; but it is a different era and owner TPG’s ambitions are more modest.
The key players in the old Alinta have kept up the headlines since those controversial days.
Mr Poynton, who admits he would have done things differently if given another opportunity, is still one of Perth’s key deal makers, shying away from board involvement in public companies to stick with his investment banking and philanthropic ventures.
But he has remained a central figure in the lives of many of the MBO group.
He is a board member of shipbuilder Austal, which employed Mr Browning as CEO until late last year as the Henderson company grew rapidly in the US.
Mr Poynton was also part of a consortium that sought to take control of mid-size Perth energy producer Tap Oil. That group included Mr Indermaur, formerly Alinta’s chief development officer, who has one of the lower profiles of the former Alinta management team.
Through his connections with Mr Poynton, Mr Indermaur has been on the advisory panel at private human resources group Credo.
He was also involved with the Poynton-backed Prime Health Group until Sonic Healthcare bought it. He has returned to a board role at Andrew Forrest’s listed Poseidon Nickel after stepping away for a year or so to work with mining magnate Gina Rinehart.
Mr Indermaur and Mr Browning also had a stake in hair treatment company Wild Child, which had considered a float.
Mr Pearce took a role as managing director of Southern Cross Electrical for around 18 months before moving to Mr Forrest’s main venture Fortescue Metals Group, where he is part of a significantly beefed up management team as chief financial officer.
In October, Mr Browning emerged as head of listed shell Australasia Consolidated, which has yet to reveal its strategy to the investment world. He has retained Mr Akehurst and Mark Barnaba, Mr Poynton’s business partner and an FMG director, as part of his advisory panel.
