Robin Kenrick Hood

Red Ink flows from Kordia

Dead CrowI have more than a passing interest in Kordia and have been keeping a watching brief on this SOE so I have just had a good look at Kordia’s latest actual accounts. They are unaudited interim accounts to 31 December 2008 …therefore full of explanatory bluster and have been released without much of a public relations “to do”.  In other words Kordia hopes and prays no one bothers to look at them.  To date they have been successful with this objective. Kordia have made a first half loss greater than they forecast. So they lost more money than they thought they would lose in the first place. Here are my lowlights of reading their accounts.

1. Arguably Kordia is currently insolvent three times over. Current assets of $53 million vs. current liabilities of $169 million. The burning question is whether Kordia can “pay its debts as they become due in the normal course of business”. If not then the company and the board are in breach of the Companies Act.  The defining point is that of how contingent are these contingent liabilities  The use of a “negative pledge” makes the solvency of Kordia more questionable as I will explain below.

Central to the solvency issue are loans of $150 million under covenants from three banks that Kordia are currently breaching. The BNZ facility expires 31 March 2009, worse ANZ reserves the right currently to call in breach. Commonwealth Bank’s facility is up in April 2009.  All have promised to play nicely.  Well, according to the interim report.

I say “arguably” Kordia is insolvent as its an SOE isn’t it?….only an SOE could have a balance sheet like this and alarm bells not start ringing with Shareholders because the Shareholder is the nicest Shareholder of them all – the Crown and a previous weak Minister under Labour.

The entire commentary from Kordia  is explaining why this massive gearing and breach of banking covenants isn’t that bad.  It reads like a child trying to get out of being grounded by their parents.

2. Kordia bought Orcon for $24,750,000 of which the net identifiable assets were just $64,000. The remaining purchase price was a whopping $24,513,000 of goodwill and a client list. Seeby Woodhouse must have felt like the Toll Directors when Michael Cullen came calling, little wonder he throws parties for New Zealand’s Next Top models in his home and appears weekly drinking and cavorting in social pages.  He’s still celebrating and full of goodwill. The Kordia Directors must have a crystal ball that no one else can gaze into or they are dimmest fools in the world because Orcon made a net loss of $3,578,000 to the Group to 30 June 08. 

3. There are 3 identifiable divisions to the Kordia Group – Kordia Networks, Kordia Solutions and Orcon. You would hope they’d be forced to break it up and flog it off. But it won’t be that easy.

4. The financing described above is done by negative pledge.  This means that there is a clause in the contract meaning none of the assets listed can be used again to borrow against.  In other words, Kordia Group currently has no more access to a financing facility than it currently has without the three banks lifting the negative pledge  as there are no assets it can loan against. The Group loans have been made in a way that means the finances of all the subsidiaries and divisions guarantees the debt of the other.  Therefore the more profitable companies in the group owned by the Crown are cross-subsidising through guarantees those that are in financial difficulty or looking to throw money at to expansion plans. Which hardly makes for a competitive environment when the Crown is competing against privately and publicly owned companies in New Zealand in these distinct areas of provision of services.

The notes state that assets can only be disposed of if within limits and ordinary course of business.

Again, the three banks (ANZ, BNZ and CAB) currently have a greater say in the running of Kordia than the Directors of the company do.  Perhaps they should be the one’s meeting Simon Power.

On pg 17 of the notes it is reported that the negative pledge is an “insurance contract”. I call it a large barrier to splitting the SOE into three salaeable pieces as you would have to unravel the $150 million of bank debt currently intertwining the operation.

On top of all this red ink is the mis-investment in terrestrial trunk radio through their subsidiary KorKor. Despite the bluster about diversifying away from broadcast technologies they then went and set up yet another broadcast radio business based on proprietary gear.

So all and all Simon Power and Bill English should have a good meeting with Kordia checking on the progress of this SOE and a please explain just what the objectives and short to medium term future of this experimental corporate of Dr (but can’t write a script) Michael Cullen actually is.

Another lie of Labour exposed

Gang of Fiscal FoolsGovernment derails KiwiRail investmentThere is concern KiwiRail might go off the tracks without more capital investment [TVNZ News Politics]

Labour bought back KiwiRail and paid considerably over the mark for the “asset”. They then also committed to spending another $500 million on rolling stock.

That was money they simply did not have, nor had any prospect of having in the foreseeable future.

Labour’s promises and ideas are as hollow as the country’s coffers after nine long years of Labour.

They promised a world cass rail system and we as tax payers had to suck that up, they did so they could campaign on it and now we find out that their promises were empty, hollow vessels.

Labour must never be trusted with the Treasury benches again. Someone should investigate the provisions under the Public Finance Act for prosecution of the Labour Ministers for deliberately and callously decieving the New Zealand public.

The traitor Jim Bolger should be called in and told to package the whole lot up and sell it for scrap, anything, that at least woould get rid of the red ink that is pouring from the books of Kiwirail.

Labour First Axis splitting already

NZ First plan to sell Kiwibank under fireNew Zealand First leader Winston Peters’ plan to sell Kiwibank is “erratic and confusing” and would risk destroying the bank, Progressives leader Jim Anderton says. Mr Peters yesterday put forward a radical proposal to float shares… [NZ Herald Politics]

The Labour First Axis has come under attack from within its own ranks today after the Greens and Jim Anderton attacked Winston’s flip flop over kiwibank.

Just a few short weeks ago Winston Raymond peters, 63, List MP of no fixed abode and proven liar was seen front and centre signing a pledge not to sell Kiwibank and today he has resiled from that by suggesting that Kiwibank be listed and shares sold to the public.

The internecine warfare of the Axis has now broken into public view and these people want us to trust them?

Where is Cullen on this asset sale?

Where is the outrage from Cullen and Peters over this asset sale happening right now.

Today there was a trading halt on Contact Energy’s shares because British gas producer BG Group went hostile today with its A$13.8 billion ($17.5 billion) bid for Australia’s Origin Energy the 51% shareholder of Contact.

Contact Energy is the second biggest company on the NZX so it surely must be a “strategic asset”, along with the fact that they provide a goodly portion of our energy needs.

Now for the uninitiated what this means is that this “strategic asset” is about to be flogged off to a foreign owner with a record of asset stripping. Not a good look for Cullen.

Personally I couldn’t care less about the sale so long as shareholders realise a good premium for their investment that is fine by me. it is however the rank hypocrisy over foreign ownership and the entirely random definition of “strategic asset” that is making my blood boil.

 

There must be an election soon

There must be going to be an election soon. Why?

Because Mallardourous is at it again claiming “bagmen” are at large this time though they are “Aussie Bagmen”.

[quote]Mr Mallard, Labour’s 10th-ranked Cabinet minister, accused Mr Key yesterday of secret talks about plans to sell the assets of State Owned Enterprises and lease them back.[/quote]

A National spokesman described Mallard’s latest “bagman” allegations as “bullshit” and that they were still waiting for him to prove the last “bagman” allegations.

Sheesh Labour are one trick ponies.

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More Toll deal revelations

The further down the track (excuse the pun) that we go the more we are finding out about how inept Michael the Tank-Engine has been and how sharp Paul Little is.

Simon Louisson of NZPA has revealed that Toll Holdings boss Paul Little is also the Director of another comany that just happened to buy Toll shares two days before the deal.

It wasn’t chump change either, Namarong Investments Pty, bought 131,500 Toll shares at average prices of $A7.62. On April 29, he disclosed the purchase of 129,000 Toll shares a week earlier at an average price of $A7.67.

Before April, Namarong already had over 900,000 Toll shares. The shares rocketed to $A8.78 on May 6, rising A50c on the day after the announcement – creating a paper profit for Namarong of nearly $A300,000 ($NZ373,700) on the April share purchases. The shares were trading at $A8.30 today and no recent sales by Namarong have been recorded.

So there is a little (again no pun intended) riddle in all of that. Why would Toll Holdings boss get another company that he is a director and shareholder of to buy additional Toll Holdings shares that would net them so far $373,700 when a) If they were reluctant sellers and the consequence of selling something supposedly valuable would be a negative impact on the share price?, and b) On May 5 they were no longer reluctant sellers but rather ecstatic sellers and Paul Little was so ecstatic about the deal he may have got a company he was associated with to buy Toll Holdings on the premise that investors would think the deal rocked due to above the market deal he nailed Cullen with, the retirement of $200 million of debt, isn’t that insider trading but more importantly c) Who got the best deal?

Toll Holdings has raped the New Zealand Government taxpayer, bent Cullen over the table and given it to him up the chook and Cullen turned around and thanked him for the priviledge of the rogering and then paid him for it as well!!

There are many more questions to be asking over this little foray into train sets of Cullen’s.

 

Who got the best deal?


So I suppose we are wondering now who got the best deal. Was it Michael?, Was it Toll?, or Was it the poor stupid taxpayer?

Lets look first reactions from the blogosphere. Of course the Labour Sponsored blogs and absentee candidates are totally in love with this whole concept. But what you expect from people who think trade is immoral!

Michael Cullen thinks he got a great deal, Tumeke doesn’t think so. (The folk at Tumeke are some of the very, very few lefties that I respect for holding their own views and not ninth floor spin)

Now if Tim and Bomber think this is a bad idea then Cullen is screwed. Tim’s post is superb and more RWB’s should read is stuff.

So was it Toll who got the best deal. You betcha it was. Cullen paid $235 million of your dollars more than the book value of the assets to the Australians. Now riddle this, it was bad for the Canadians to buy 49% of one airport and put millions into the economy through Mum & Dad shareholders, but good for the Chinese to buy the capital’s electricity network and now it is fantastic for New Zealand to back the money truck up and tip $665 million of our dollars into the Australian economy. Fuck he is a whizz that Cullen.

Now if this was a bad deal for Toll you would expect the market to react badly and downgrade their share price. Instead the market has thought the exact opposite and voted with their wallets. The share price jumped 4.4% or 35c on the news gifting Toll Holdings and their shareholdings…wait for it….an additional $226 million in the total value of the company.

Show shareholders and investors worldwide voted with their wallets. Toll got the best deal, we as the poor stupid taxpayer got the bill. That is a lot of hooter for Michael to buy a train set.

Give him another one

Apiata gifts Victoria Cross to SAS – New Zealand, world, sport, business & entertainment news on Stuff.co.nz

Cpl. Willie Apiata has gifted his Victoria Cross, awarded last year for heroism in dragging an SAS colleague to safety under heavy fire in Afghanistan, to the SAS.

By gifting the medal to the NZSAS Trust it can never be sold and is arguably going to be in the most secure place in new Zealand, SAS HQ at Papakura.

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How bloody arrogant

Treasury spurned in airport decision – 24 Apr 2008 – Politics: New Zealand Political News, Analysis and Comment including 2008 election coverage – NZ Herald

Michael Cullen is an arrogant, ignorant, wanker. He was advised by Treasury to allow the sale of Auckland International Airport Limited to the Canadian Pension Plan to go ahead.

Coupled with the OIO advice for the same it just shows the arrogant and political machinations that Labour went through to cynically closed down the offer at the last moment, thereby robbing ordinary shareholders of millions of their own money. Labour did it for politics and for no other reason.

Treasury also pointed out the sheer hypocrisy of a government stopping overseas investment in airports when our own companies do exactly the same thing. Infratil owns airports in England, Scotland and Germany.

Not only that the government has breached international laws and conventions in their spiteful actions. But then with a leader such as Clark is it any wonder that their moral compass is so wonky?
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Why?

Government bids to buy back trains, ferries – 07 Mar 2008 – Politics: New Zealand Political News, Analysis and Comment including 2008 election coverage – NZ Herald

Proof that the government is thinking with its dick and not its brain is the news that they aaret ryinng to buy back the Rail and Ferry network, even though they won’t make any money.

The Government has confirmed it is in talks to spend hundreds of millions of taxpayer dollars to buy back the rail and Cook Strait ferry assets of Toll New Zealand – which the Beehive admits are unlikely to ever make any money.

Why anyone would want to buy a 19th Century technology that can be beaten both in time and money by Trucks is beyond me. The only viable thing to do is pull up the bloody tracks and turn the land into a freeway between Wellington and Auckland for trucks and buses. Cullen of course is dreaming the dreams of a mad man.

“We believe that with Crown ownership, we’d be capable of creating a more strongly integrated rail system, not just in terms of goods movement but also in terms of the urban passenger systems where there are interrelationships there,” Dr Cullen said.

“This is not a business which is ever going to make money, overall, and therefore we either end up subsidising the private sector or we end up subsidising ourselves on behalf of the people of New Zealand.”

Mmmm-kay, so we are pour the almost a billion bucks on something that makes a loss. Why? The answer probably lies somwhere in between OnTrack Director and Labour Party President Mike Williams, Helen Clark and TRANSPORT MOGUL Owen Glenn.