Wednesday, January 17, 2007

Macquarie sacked as Alinta drops....

The Austrlaian and Austrlaian Financial Review (AFR) have both reported that Australian energy utilities group Alinta Limited (ASX:AAN) has severed its advisor contract with Macquarie Bank Kimited (ASX:MBL).

The investment bank had been hired to look at options for a restructuring of the business, but has now been revealed as the backer of a leveraged buy-out proposal for Alinta made by a group of directors and CEO Bob Browning. Alinta suggests a serious conflict of interests, and has issued a set of demands Macquarie must comply with before it is allowed to enter negotiations on the private equity transaction. All mandates involving future work will cease, although Macquarie will be compensated for corporate advisory work already undertaken. New Alinta chair John Akehurst has revealed that Macquarie Bank was already working on the buy-out deal when it was still advising its client, and that it took about a week for it to disclose the matter. Macquarie has stated that it will only participate in the management buy-out if Alinta perceives its advances as friendly.

Alinta has also rejected claims by Browning that Babcock & Brown (ASX:BNB) was interested in a takeover of Alinta.

This is a very interesting twist to the Alinta takeover story and as anyone can see there is a major conflict of interest for Macquarie Bank. The conflict of interests surrounding the buy-out plan is likely to affect the share price of the company and ALinta has already dropped 1% today. Analysts are forecasting that if the proposal does not come to fruition, Alinta stock will languish at about $12, compared with up to $17.24 if a takeover offer emerges.

Catroon presented was done by Nicholson of "The Australian" newspaper: http://www.nicholsoncartoons.com.au/

Good Luck Investing.

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