Management 'cherry-picking' Alinta

SENIOR Alinta management including chairman John Poynton and boss Bob Browning have proposed a $6 billion-plus management buyout of the one-time WA Government-owned gas distributor, backed by the company's adviser, Macquarie Bank.
Macquarie's involvement in advising Alinta management on the buyout comes despite Alinta already paying the bank for advice on an internal restructure of Alinta under the same management for the benefit of all shareholders.
Mr Poynton and four top Alinta executives - Mr Browning, Chris Indermaur, Stephen Pearce and Murray King - are behind the buyout attempt, with Macquarie Bank also considering taking a stake in the deal.
Alinta has elevated director and former Woodside boss John Akehurst to chairman as Mr Poynton stood down to head the buyout. Mr Poynton and Mr Browning remain Alinta directors but will not take part in evaluating the buyout or any other proposal.
Funding has not yet been secured but management will have "significant skin in the game", Mr Poynton said.
The buyout group was working on delivering a "significant premium for all shareholders", he said, while private ownership would assist the company's acquisition strategy. Alinta's shares rose $1.42 or 13 per cent to $12.63 yesterday.
Among those expressing concern over corporate governance issues under the proposed deal, Citigroup analysts observed a "pretty substantial conflict of interest".
Stuart Turner from Challenger demanded new chairman John Akehurst explain why the board had not sacked Mr Browning for his involvement, saying corporate governance concerns raised in the deal had been "somewhat politely called a potential conflict of interest issue.
"My very simple, very traditional way of understanding these things is that a board appoints a managing director to run a company - not to cherry-pick assets out," Mr Turner said.
"I would have thought, prima facie, that the board … would view that he has actually exceeded his brief and the question is why he was not asked to resign."
Investors also highlighted Mr Poynton's position on Alinta's valuation. Defending AGL's takeover bid last year, he claimed Alinta was worth $17 a share, while he now stood to be part of a bid offering substantially less.
In addition, investors noted that management told the Alinta board of its interest in a buyout on November 30, a week before announcing a profit warning, yet there had been no announcement on the buyout proposal until yesterday.
The buyout proposal appeared to cruel Alinta's planned internal restructure being driven by the present management team, investors said.
Mr Akehurst said Alinta would consider offers from "others" and had appointed Carnegie Wylie and JPMorgan as advisers.
He would not guarantee the futures of the executives if the buyout failed but acknowledged the company could not afford to lose them completely while the buyout was being considered.
"My sense, and that of the independent directors, is that to remove from Alinta four of our most senior managers at this stage, and remove them also from duties in which they wouldn't have a conflict of interest, would be contrary to the shareholders' interests," Mr Akehurst said.
The deal comes after an active 2006 during which Alinta raided AGL's share registry before walking away with an asset and debt swap.
The Australian Competition and Consumer Commission, which is examining Alinta's bid for Origin's gas infrastructure assets, which include 17 per cent of gas distributor Envestra, said Alinta had suggested it might go for 100 per cent of Envestra.