Poynton sheds light on MBO

John Poynton has shed some fresh light on the events within Alinta Ltd that ultimately resulted in the sale of the business and significant public bloodletting.

In his speech to a WA Business News Success & Leadership breakfast last week, Mr Poynton largely held back from taking a swipe at what earlier this year had become his nemesis – the independent group of directors led by chairman John Akehurst.

While admitting he did consider the speech an opportunity to “spray” those considered his opponents, Mr Poynton instead used the occasion to speak in general terms about how directors were increasingly avoiding risk, to the detriment of shareholders.

If this was a coded shot at Mr Akehurst et al, it was tame by comparison with some of the off-the-record comments from within Mr Poynton’s management buyout camp.

It certainly seemed like the Perth-based investment banker had mellowed since the height of the Alinta debacle.

But his commentary still provided something for those who’ve been raking over the coals of the MBO.

Mr Poynton confirmed previously unattributed speculation that the MBO had been considered dead by those within the buyout group after failing to reach a deal by the end of 2006.

It was after that, Mr Poynton said, that he was contacted by the independent directors and told he had to leave.

All this happened before the MBO attempt became public, with the original deal fizzing out before what’s understood to have been a self-imposed deadline of December 31.

In fact, one of the other MBO members has said that Mr Poynton was in an Alinta strategic planning meeting on January 2 when he received the call that informed him the independent directors no longer supported him.

In effect, that event revived the MBO.

“I was told I was no longer required so I had to make a decision whether to walk away or have a go,” he said.

But, Mr Poynton also confirmed that Alinta was in play already. The original MBO had been conceived after an approach to lead defence actions by Goldman Sachs, accompanied by a warning that private equity was circling.

“By the time we did the AGL deal at the end of ’06, management formed a view that maybe it would be tricky from now on because the market had been quite critical about some deals after then by APG and with Alinta Infrastructure Holdings,” Mr Poynton said.

“We began to think, ‘what next’?”

The Goldman Sachs approach confirmed Alinta’s vulnerability, and the management team agreed the company was undervalued by the market.

“Those discussions turned quite rapidly into not just defence, but the possibility of an MBO,” Mr Poynton said.

“The management team came to me and said they would not do it unless I did.

“I remember the conversation like it was yesterday. What do you actually do? You are aware of the impact of being involved will have but I had no idea of the maelstrom to come.

“You are actually thinking: ‘This is good. I have no shares so I can take the I’m going to make money from this hat off and look at the right thing to do for shareholders’.”