Hill Samuel

"Stokes continued to look beyond shopping centres. Planning and building regulations were multiplying faster than the population. The fun had gone out of it, and while there was still money to be made, the golden days were over. Having founded CPI as a public company, in 1977 Stokes and Bendat decided to privatise – but through a strange mechanism. Instead of the pair buying directly, their associated private companies, Retford Pty Ltd and Villaro Pty Ltd, employed a mining company, North West Mining NL, to make a takeover bid. The money for the takeover was raised through a loan organised by North West from the merchant banker Hill Samuel, which later became the Macquarie Bank. The loan was to be repaid by declaring a dividend funded from revaluing the shopping centres after the takeover deal was complete. The complicated deal was put together by Geoffrey Cohen, for years Stokes’ corporate lawyer, and director of many of his companies. Also acting for the pair at this time was David Gonski, then with the law firm Freehills. A key feature of the Stokes–Bendat success, as it had been with that of the Stokes and Merifield partnership, was their ability to hire the best advisers and work closely with them. Why was the deal done through the proxy company? Stokes later told journalists there was ‘nothing untoward about it’. The reason had been legal problems to do with tax and capital distribution. ‘It would not have been possible without the interpositioning of another public company.’8 It was less than a complete explanation. Retford and Villaro were trust companies, and the beneficiaries of the trusts were members of the Stokes and Bendat families. The directors were Cohen and a chartered accountant. Stokes and Bendat did not technically control the companies but had the power to appoint and remove their trustees. In fact, they were clearly their companies, used both for this transaction and for their interest in South Western Telecasters. When it came to CPI, Stokes and Bendat were selling their shares to their own associated companies and asking other shareholders to follow. It was effectively a related-party transaction but without the level of transparency that would have been necessary if the deal had been done directly, rather than through North West. The offer document declared that the shares would ultimately be transferred to Retford and Villaro, and it also disclosed that Stokes and Bendat had ‘an association’ with those companies but was less than completely transparent about the nature of the association."

"That, to me, was a very great promise. In the middle of this Consgold turmoil, which lasted almost a year, we made several million pounds on the transaction because, as we kept buying, the attendant publicity suddenly focused on Consgold as a takeover target. In fact, the Oppenheimers themselves then subsequently made a bid for more Consgold stock. The move on Consgold promised to give Munk much-needed mines, which “I would get later on by buying Goldstrike, but at that time I needed the next step.” A week after Munk met with Agnew, Bill Birchall received word that Hill Samuel was interested in buying all or any part of Barrick’s 5-percent shareholdings in Consgold. That useful information was of great comfort to Peter Munk, whose Consgold play had driven the market value of Barrick’s 4.9-percent holding up by over $10 million and rising. That would mean a tidy profit on an investment made but a few months earlier."

"The solution was provided by Sir Harry Moore of the small merchant bank Philip Hill, Higginson (subsequently part of Hill Samuel, which was behind many of the aggressive takeovers of the 1980s). Moore had acted for Radio & Allied in its abortive attempt to buy , Ekco and in its recent talks with EMI and others. Now he took Arnold Weinstock and Kenneth Bond to see GEC."

"THE BARE BONES of the coup were later exposed in the takeover documents required to be lodged with the Perth Stock Exchange. The two family companies that Stokes and Bendat controlled, Retford and Villaro, had borrowed $2.8 million from Hill Samuel and lent it to North West Mining. In return, North West Mining agreed to transfer 1,430,309 CPI shares each to Retford and Villaro. According to the lodged documents, the market value of properties owned by CPI on 28 February 1977 was about $21.5 million. The statement said this was more than $4.5 million above the value recorded on the company’s books. The new valuation boosted CPI’s net assets from $1.49 per share the previous 30 June, eight months earlier, to about $3 per share. At a glance, the North West Mining offer of $1 a share had seemed generous because it was more than the most recent market price of 70 cents. But it was well below the asset backing of $3 a share — which was why the Hong Kong bankers had resisted selling their holding at $1. But for unsophisticated shareholders, rattled by three years of bad news, it was a chance to get out at what seemed like a profit. After all, the company’s recent track record had been patchy: with sales from as low as 20 cents and up to 63 cents on the eve of the offer. For reasons carefully explained at annual general meetings, it had not paid a dividend for three years. Failed and struggling shopping centre developments in the middle of a recession had shaken shareholders’ confidence and here was a way out."