Fay, Richwhite

"In 1990, the government had sold Telecom to two US telecom giants, Ameritech of Chicago and Bell Atlantic of Philadelphia, and to the New Zealand firms Freightways (owned by Gibbs and Farmer) and Fay, Richwhite (the investment bank owned by businessmen Michael Fay and David Richwhite) for $4.25 billion. Freightways and Fay, Richwhite had brokered the deal and Gibbs, who was on Telecom’s board, chaired the board committee that ran the company. Through this, Gibbs had come to know the Americans well and was used to dealing with them. He offered to talk to them about whether they might be interested in Sky. It turned out that they might."

"With a likely price tag of at least $2.5 billion, Telecom itself was beyond the capacity of any New Zealand company to buy on its own. Gibbs thought Fletcher Challenge, the biggest local conglomerate, might be interested — ‘Hugh Fletcher,’ he says, ‘wanted to buy everything, at a bargain price’ — but even they would need to partner with someone. The task therefore was to find a suitable international partner. So while Farmer was concentrating on negotiations with Telecom over Netways, Gibbs began to search on his own in the early months of 1989. He soon got wind that merchant bankers Fay, Richwhite were also tapping the walls."

"Alongside Gibbs and Richwhite, two Fay, Richwhite men, Rob Cameron, a former senior Treasury official, and Steve Walker (‘Wakka’), a young thruster, rounded off the core of the team. For a while they called themselves the ‘Steam Team’, after a local brew in San Francisco (Anchor Steam) which they’d drunk in large quantities on American visits. In May 1989, a few months into their quest for Telecom, Gibbs was stunned to learn that Michael Fay had successfully obtained a 30 per cent stake in the Bank of New Zealand for Capital Markets, a public company Fay, Richwhite controlled. Richwhite remembers Gibbs yelling, ‘Why the hell did you want to buy a bloody bank?’ ‘He rang up a few hours later to apologise and said it was an amazing deal, well done; but Gibbsie’s first reaction was right.’ It emerged that the BNZ was laden with bad debts, mostly in Australia, making the investment a sour one."

"It provoked a celebrated court case driven by some disgruntled Lion shareholders, which, once solved, allowed the merger to proceed.[8](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-8) As a Lion director Gibbs watched the saga unfold and he was later drawn to observe: ‘David Richwhite is one of the most aggressive businessmen this country has ever produced, and I mean that as a heartfelt compliment.’[9](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-9) Having been hired by several of the new SOEs, including Telecom, to raise capital on international finance markets, Fay, Richwhite had deep relationships throughout the Wellington commercial and government worlds."

"In a decade of deal making, this one had brought Gibbs close to heaven. The $4.25 billion privatisation of Telecom proved to be the sixth largest deal done anywhere in the world in 1990.[24](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-24) The merchant banking fee that the Americans would pay Freightways and Fay, Richwhite, which they calculated at $52 million, was unmatched internationally that year. Gibbs was cock-ahoop. It had been a great team effort that combined the determination and deal-making brilliance of Gibbs with the breadth of talent and relationships that Richwhite had fostered at his merchant bank. The Telecom deal was also Richwhite’s proudest moment in business. He summed up their collaboration: ‘Gibbs wouldn’t have won it without us; we wouldn’t have made so much money without Gibbs.’[25](private://read/01jrsfvkjy84rkprtbz9amfvj8/#rw-num-note-477273-050103421-25)"