Friday, June 29, 2012

Hastie Group labourers still high and dry in United Arab Emirates. Yet to receive a cent in payouts.

By Business editor Peter Ryan - EXCLUSIVE

Five weeks after the collapse of the Hastie Group, 1,000 staff based in the United Arab Emirates (UAE) have been left in the lurch, with their former managers forced to support them out of their own pockets.
Listen to the story broadcast on this morning's edition of AM.

In Australia, about 80 per cent of the 2,700 workers made redundant are now back working for other contractors, having received their full termination entitlements.

But the 1,000 mainly Indian and Bangladeshi labourers are yet to see a cent of their entitlements, known locally as gratuities, after Hastie's bank account was drained of $3 million just days before administrators were appointed.

And a small group of Hastie managers, who have been using their own money to help abandoned employees, claim they have been left high and dry by the administrators.

Hastie's general manager in Abu Dhabi, Darren Hunt, is one of four bosses left in the country, and like his workers, he feels abandoned.

He says managers have been left in the lurch and are standing by foreign labourers at their own personal expense to meet food and housing costs.

"I think that what has happened is criminal," he told AM.

"The three senior managers have absconded the country, left 940 employees in the Middle East.

"There is a humanitarian issue where we have got to accommodate people, we've got to provide food.

"We've got no funds to do that, we've got no access to do that and we've got no signatures to do that. I think there is a humanitarian issue and I think these people have got no morals doing what they've done."

"We are incurring, you know, daily expenses to try and make sure we do the right thing by these people.

"My personal expenses to date to Hastie are 90,000 dirhams which is probably 15,000 pounds, $30,000, I've got no chance of recovering."

Mr Hunt claims Hastie's Australian-based administrators have ignored offers to help sell assets and call in debts to open up the money pipeline to help pay out local employees.

"I've had interested parties in buying Hastie International Abu Dhabi, which was a profitable business, which had limited liabilities, and had quite a large debt in the market that was due and could have been collected," he said.

"That debt alone would have paid for all this to be administered properly and the business closed down properly."

The Hastie Group's joint administrator Craig Crosbie sympathises, but rejects those claims.

"We've actually asked that the management over there to articulate exactly what assets they are talking about but you know, none of that has been forthcoming unfortunately," he said.

And Mr Crosbie says he does not have the power to treat Hastie's foreign workers the same as Australians.

"In Australia in the circumstance we've got, we can make an application to the Federal Government and they step in and pick up these entitlements, which if we didn't have there would be a number of Australians who would be in the same boat as what these people in the Middle East are," he said.

But Darren Hunt will not be trying to sell that explanation to his workers.

"Get your arse to the UAE and help us with this situation, you know. It is unacceptable," he said.

Thursday, June 28, 2012

Fairfax Media shares flat as investors weigh Gina Rinehart threat to dump shares if board bid rejected

Fairfax chairman Roger Corbett closes boardroom door on Gina Rinehart

Statement from Fairfax Media chairman Roger Corbett 27 June 2012

Gina Rinehart's showdown with the Fairfax Media board has the potential to further damage the company as it rolls out a painful editorial restructure at the Sydney Morning Herald and The Age.

By closing the boardroom door on Gina Rinehart -  for now at least - Fairfax chairman Roger Corbett is sending the message that the definition of editorial independence has to be a collective view rather than that one tailored to the interests of individual powerful directors or investors.

Listen to my analysis broadcast on this morning's edition of AM.

I understand the Fairfax board remains concerned that Mrs Rinehart made no acknowlegement of the existing charter and certaintly doesn't accept the charter is binding on the Board.

Other big instituational investors are also known to have expressed concerns that a single board member blessed with special powers would set a dangerous precedent.

But some observers believe the issue of independence is just one part of Fairfax Media and Mrs Rinehart exclusion on the basis of the charter ignores other experience she could bring to the Board.

The media analyst Roger Colman of CCZ Equities says the current damaging game of boardroom poker needs to be decided by shareholders at the next annual general meeting.

"The board is backing the wrong horse in respect to that charter of editorial independence at metro markets," Mr Colman said.

"I think Gina should put it to the test at the next AGM and just see if she has the backing. She'll find out what the shortfall is and if she's got to buy more stock progressively over the next year and a half to two years, she should go for it.

"It's no different to Tony Abbott asking for an election against Julia Gillard. I mean, go to the people.

"This dispute has got to be settled in a single numerate count of shareholders votes."

Mrs Rinehart has not withdrawn her threat to dump all or part of her 18.67 percent stake in Fairfax if her demands for three board seats and editorial sway are not met.

There are concerns that any backlash could further undermine the Fairfax share price which hit a record low of 53.5 cents a share earlier this week.

But other big institutional investors might also be buyers.

They could well be concerned that their investments could be harmed if any erosion of editorial independence gets in the way of the survival strategy currently under way at The Age and Sydney Morning Herald.

Falling fortunes: Fairfax share price year to 28 June 2012. Source: Bloomberg

Wednesday, June 27, 2012

Fairfax Media boss Greg Hywood defends Board's right to hire and fire. Confirms Rinehart discussions but says appointment a matter for Fairfax board.

By Business editor Peter Ryan

The chief executive of Fairfax Media says board members are entitled to debate the editorial direction of the company and make collective decisions about the appointment of editors.

However, Greg Hywood told AM this morning that individual directors or major shareholders did not have a right to tell journalists or editors what they should write.

Listen to the extended interview here.

Mr Hywood's comments on boardroom decisions and editorial independence come as Fairfax Media staff learn the details of the company's restructure which will see 1900 jobs axed, printing presses closed and The Age and Sydney Morning Herald converted to tabloid formats.

The Fairfax boss also confirmed he had "a terrific meeting" with the mining magnate Gina Rinehart who, as the single biggest shareholder, is so far refusing to honour Fairfax's charter of editorial independence.

"I mean she asked very pertinent questions about the company. We gave her a briefing about the company. It was an admirable meeting. It was a good meeting," Mr Hywood said.

However, Mr Hywood said he had no discussion with Mrs Rinehart about her bid for seats on the Fairfax board or a say in the company's editorial direction.

" We didn't discuss any of those issues. I mean, whether or not Mrs Rinehart comes onto the board or not is a board issue and, you know, we'll leave it at that," Mr Hywood said.

But the embattled publishing boss has this message for staff or Australians concerned about Fairfax's future under any new ownership.

"There's been a lot of speculation around editorial independence in relation to Fairfax. That will always stay. That is the core of this company."

At the same time, Mr Hywood defended Mrs Rinehart's right to be a vocal investor in Fairfax Media.

"Oh look, I think she's interested in journalism. She's interested in, you know, the future of Australia. She has her own opinions about that and she's entirely entitled to them. So I don't think there's anything controversial in that at all."

But Mr Hywood clarified the role of boardroom deliberations at Fairfax Media and the hypothetical scenario of how Mrs Rinehart's opinions would be managed if she secured one or more board seats.

"Look she's our major shareholder. As I said, whether or not she joins the board is up to the board. And if you're a board member editorial discussions are always held within board meetings," Mr Hywood said.

"What doesn't happen is it doesn't translate into board members telling journalists what they should or shouldn't write and that's our practice.

"The board is pre-eminent. The board operates collectively. No individual director can determine what the board does or doesn't do.

"And certainly, if someone buys the entire company and has more than 51 per cent of the company that's a different issue."

Mr Hywood refused to speculate on the scenario of Mrs Rinehart joining the board or the outlook for his role as chief executive if the mining magnate makes a full takeover bid.

"That's entirely speculative and hypothetical," Mr Hywood told AM.

Fairfax Media shares were 2.2 percent higher in late morning trade after hitting an intraday low of 53.5 cents yesterday.

Tuesday, June 26, 2012

Gina Rinehart threatens to dump Fairfax Media stake if boardroom demands not met. Shares at record low of 53 cents on ultimatum.

The mining magnate Gina Rinehart has threatened to dump her majority stake in Fairfax Media unless her demands for three boardroom seats and editorial sway are not met.
The ultimatum raises the stakes in Mrs Rinehart’s standoff with the Fairfax Media board which remains adamant it will not be bullied into capitulating for the demands.
In another dramatic days for the Australian media industry, Mrs Rinehart also increased her stake in the Ten Network further confirming her widening role as a media player.
Meanwhile, Andrew Holden was named as Editor in Chief at The Age after yesterday’s dramatic departure of three top editors.
Listen to my updated analysis broadcast on The World Today which covers the development that David Leckie had stepped down as chief executive of Seven West Media.

Monday, June 25, 2012

Fairfax Media loses three editors in one day as digital survival struggle gets real

Analysis: Desperately seeking a survival strategy at Fairfax Media

By Business editor Peter Ryan

There's an element of desperation in today's announcement from Fairfax Media that three top editors have decided to quit on the same day.

The imperative for Fairfax to act - and to act quickly - underscores how critical the coming days and weeks will be to the ultimate survival of Fairfax's two once-great metropolitan mastheads, The Age and The Sydney Morning Herald.

Working journalists usually come and go, and it's certain many will be leaving Fairfax more frequently than usual.

But the departures of Peter Fray and Amanda Wilson from the SMH and Paul Ramadge from The Age mark a dramatic turning point for the traditional and closely guarded power positions of editors and editors-in-chief.

Until today, those two fiefdoms carried often unquestioned editorial powers and distinct editors and editors-in-chief highlighted the rivalries and critical points of difference between The Age and the SMH, and the well-worn debate about pre-eminence between Australia's two biggest cities.

This afternoon's appointment of Sean Aylmer as editor-in-chief and Darren Goodsir as director of news at the SMH signal revamped editorial roles that dilute the powers of traditional Fairfax editors with decisions about national and international coverage ceded to a centralised hub.

While Fray, Wilson and Ramadage are leaving with dignity and no criticisms of the restructure which has claimed their careers, it is highly likely the weakened powers and the prospect of slashed budgets, major sackings and depleted journalistic firepower made a healthy redundancy package slightly more palatable.

Tomorrow's editorial revamp to be announced for The Age will be closely watched for confirmation on whether the editor-in-chief role remains or whether it is to come under a nationalised umbrella in Sydney.

A well-connected Fairfax observer says the latest dramatic developments show the editorial changes are, at the very least, "disruptive" but a necessary survival strategy for staff, investors, readers and advertisers.

The observer, close to Fairfax institutional shareholders, declined to be named but told the ABC the speed of the restructure confirms the stakes are high with Fairfax shares hitting a new low of 55.5 cents a share during the day. I was told,
Greg Hywood [Fairfax chief executive] and Roger Corbett [Fairfax chairman] really do have their backs to the wall.u can sense the desperation. Why else would you be unfolding this so quickly? They know that the company might not survive unless they engage in radical restructuring.
The biggest risk in this strategy is that they might actually accelerate the decline of print media. It's dramatic - switching from broadsheet to tabloid, taking some grunt out of your journalism, making advertisers less certain. This could exacerbate the decline.
In the end, this is mainly a downsizing exercise and managing the transformation of a big company into a small company.
However, today's announcement helps Fairfax deal with another threatening deadline in the shape of Gina Rinehart and her bid for three Fairfax boardroom seats along with a say in the hiring and firing of editors.

The initial appointments of an editor-in-chief and a director of news confirm that Fairfax is serious about major change, locking-in key editorial positions before Mrs Rinehart ups her 18.67 percent stake in the company.

But will this be enough for Fairfax's best loved mastheads to survive?

The key, according to one Fairfax watcher, is for the company to stop talking about the future and the beginning of a "new era" and to accept that the new digital world probably started at least 10 years ago.

Peter Ryan is the ABC's Business Editor, contributing to a range of ABC News programs including the flagship radio current affairs program AM. He tweets as @peter_f_ryan

Sydney Morning Herald & The Age editors to leave as Fairfax Media accelarates survival strategy