Carnegie fights for structure change

16 June 2014
The Australian Financial Review
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Investor Mark Carnegie has warned the boards of Washington H Soul Pattinson and Brickworks the push to dismantle the cross-shareholdings won't go away when his agreement with Perpetual expires at the year's end, in his first interview since lodging an explosive cross-claim in the Federal Court.

"Our involvement is a sideshow," Mr Carnegie told the Financial Review Sunday program. "Perpetual have been a shareholder in this company for nearly two decades. They are the most significant shareholder. They have had proposals which have been brought to them by other people. They have had arrangements with other people. They want this situation to stop. They will continue to pursue."

Documents lodged with the Federal Court alleging oppression of minority shareholders and questioning business judgment are the latest round in a long-running battle between Perpetual and the Robert Millner-chaired boards of Washington H Soul Pattinson and Brickworks. Soul Pattinson owns 44 per cent of Brickworks, which owns 43 per cent of Soul Pattinson. This type of structure was outlawed in 1990.

The companies have been allowed to continue with it because they have operated this way since 1969.

"There's been a series of things that have happened over a long period of time where the board has ignored the interest of the largest shareholder – ­proposal after proposal has been treated with absolute contempt and when a proposal was put in front of the board they chose to sue the proponent," Mr Carnegie said. "We've been sued – as the biggest shareholder in this business [we] took an unprecedented step of asking to put a series of proposals in front of the shareholders of Brickworks and Soul Patts. We got sued. All we have done, subsequently, is take our time, think through the consequence of being sued, to come up with a proposal that deals with the circumstance we now find ourselves in. We've been sued for false and misleading conduct in a whole lot of other things. The people who chose to put us in court were the boards of Soul Pattinson and Brickworks. All we are doing is lodging our defence and counter-claim."

Hunter Green's Charlie Green said the court claims were "the biggest thing that's happened to Australian corporate law in the last decade".

Mr Millner declined to comment.