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We at Unbalanced love it when an Australian does something world-first, even if the honour in question is somewhat dubious. An ‘honour’, say, such as placer of the very first call to the administrators of Lehman Brothers in September 2008. As Wall Street burned, the board of the ASX-listed technology small-cap, Hyro Limited, realised it had a problem. It was a A$21 million problem, actually, in the form of a convertible note taken out in July 2008 (nice timing!) which now gave the corpse of Lehman a stranglehold over the Melbournebased security software vendors. “When we woke to the [Lehman collapse] news, we knew the wind-up process would be incredibly lengthy, so we thought it best to get on the front foot,” reminisced Hyro’s chairman, Robert Clarke, last month. “The administrators in Hong Kong [dealing with Lehman’s Asia- Pacific business] told us we were the first counterparty in the world to have called.” With the note’s fixed and floating charges restricting Hydro’s every move, Clarke needed a quick resolution and his place at the head of the queue got him one, at least by the standards of other Lehman victims still before the courts. By August 2009, Hyro had struck a deal whereby the Lehman liquidators forgave the debt in return for a 17 per cent stake in the company, as well as some cash raised from divestments, including the obligatory underperforming subsidiaries in China and New Zealand. The company is now focused on Idaptive, which claims to help the many IT systems heading into the Cloud keep their identity and access management grounded. Hyro is even feeling chipper enough to be going back to the capital markets, to raise $4 million of which three-quarters will be used to retire a longstanding debt to the Australian Tax Office. The patient owner of 8 per cent of the company, the Macquarie small-caps fund run by Neil Carter, will no doubt be at the head of the queue of those approached.


RBA chided for repeating itself
It’s always nice to hear of somebody in financial services who loves the English language. Paul Bloxham, the chief economist of HSBC in Australia and New Zealand, found himself feeling very disappointed about last month’s interest rate announcement by the Reserve Bank of Australia. It wasn’t that Glenn Stevens and the gang decided against a move, which always creates a bigger audience for commentary from economists like himself. No, Bloxham was let down by the way they announced it. In particular, he suspected the Governor had been pressing ‘Control + C’ on his keyboard. “The post-meeting statement was almost identical to last month’s, with six paragraphs covering: the strong global expansion led by Asia; the Australian terms of trade being very high and the consumer cautious; asset values being little changed; labour market steady but tight and skill shortages and wages contained; inflation expected to be consistent with target; and the mildly restrictive policy being appropriate.” Bloxham lamented that the only new things were a brief mention of the disaster in Japan; a note that flooded coal mines are taking longer to get back to normal than expected; and a brief word on moderating employment growth. The huffy HSBCer reminded readers of Glenn Stevens’ words in February: When the policy setting is “ahead of the game … that affords you periods of sitting, waiting and watching”. As well as a period of plagiarising yourself, apparently, Bloxham hoped the RBA’s recycling of its March statement in April was a one-off. “While this approach is a practice followed by some other central banks – the Fed, for example – the RBA usually furnishes us with delights of an extended vocabulary from a well-trained and highly judicious group of wordsmiths. If this is the new paradigm, like others, we may have to get a computer to calculate the number of new words and use this variation to assess dove-ishness and hawkishness. Hopefully it hasn’t come to this. “ In light of Bloxham’s comments, we’ll be reading the May statement with more interest than usual.

Conflicts? Bring it on You can’t accuse Angela Emslie of trying to change an awkward subject. She was directing audience questions to the Stronger Super Peak Consultative Group chair at last month’s Conference of Major Superannuation Funds, when Paul Costello sought clarification of a query about trustee conflicts. “I think he’s talking about directors on multiple superannuation boards, and whether that’s a problem,” piped up Emslie, to a mixture of guffaws and approving murmurs from the audience. Emslie is, after all, the chair of HESTA, and a trustee director of CareSuper and Vision Super. She used to be on VicSuper’s board as well. You obviously don’t get someone on the board of both Coles and Woolworths at the same time, so Emslie has long had to defend why it’s okay for her to direct several super funds that are technically in competition with each other. Her chair at CareSuper, Michael O’Sullivan, believes the competition between most industry funds really is only ‘technical’, and that “the real battleground has been between profit-to-members funds and retail master trusts”. Emslie has always maintained that if she gets a good idea for one fund, she shares it with all her funds to the extent that it’s appropriate to them. Costello, for his part, didn’t reveal whether he thought multiple directorships were an issue or not.

Hyro an unlikely
hero of meltdown
We at Unbalanced love it when
an Australian does something
world-first, even if the honour in
question is somewhat dubious.
An ‘honour’, say, such as placer
of the very first call to the administrators
of Lehman Brothers in
September 2008.
As Wall Street burned, the
board of the ASX-listed technology
small-cap, Hyro Limited, realised
it had a problem. It was a A$21
million problem, actually, in the
form of a convertible note taken out
in July 2008 (nice timing!) which
now gave the corpse of Lehman a
stranglehold over the Melbournebased
security software vendors.
“When we woke to the [Lehman
collapse] news, we knew the
wind-up process would be incredibly
lengthy, so we thought it best
to get on the front foot,” reminisced
Hyro’s chairman, Robert Clarke,
last month.
“The administrators in Hong
Kong [dealing with Lehman’s Asia-
Pacific business] told us we were
the first counterparty in the world
to have called.”
With the note’s fixed and
floating charges restricting Hydro’s
every move, Clarke needed a quick
resolution and his place at the head
of the queue got him one, at least
by the standards of other Lehman
victims still before the courts.
By August 2009, Hyro had
struck a deal whereby the Lehman
liquidators forgave the debt in
return for a 17 per cent stake in
the company, as well as some cash
raised from divestments, including
the obligatory underperforming
subsidiaries in China and New
Zealand.
The company is now focused
on Idaptive, which claims to help
the many IT systems heading into
the Cloud keep their identity and
access management grounded.
Hyro is even feeling chipper
enough to be going back to the
capital markets, to raise $4 million
of which three-quarters will be
used to retire a longstanding debt
to the Australian Tax Office.
The patient owner of 8 per cent
of the company, the Macquarie
small-caps fund run by Neil Carter,
will no doubt be at the head of the
queue of those approached.
RBA chided for
repeating itself
It’s always nice to hear of somebody
in financial services who loves
the English language.
Paul Bloxham, the chief
economist of HSBC in Australia
and New Zealand, found himself
feeling very disappointed about last
month’s interest rate announcement
by the Reserve Bank of Australia.
It wasn’t that Glenn Stevens
and the gang decided against a
move, which always creates a bigger
audience for commentary from
economists like himself.
No, Bloxham was let down by
the way they announced it.
In particular, he suspected the
Governor had been pressing ‘Control
+ C’ on his keyboard.
“The post-meeting statement
was almost identical to last month’s,
with six paragraphs covering: the
strong global expansion led by
Asia; the Australian terms of trade
being very high and the consumer
cautious; asset values being little
changed; labour market steady but
tight and skill shortages and wages
contained; inflation expected to
be consistent with target; and the
mildly restrictive policy being appropriate.”
Bloxham lamented that the
only new things were a brief mention
of the disaster in Japan; a note
that flooded coal mines are taking
longer to get back to normal than
expected; and a brief word on moderating
employment growth.
The huffy HSBCer reminded
readers of Glenn Stevens’ words in
February: When the policy setting
is “ahead of the game … that affords
you periods of sitting, waiting and
watching”.
As well as a period of plagiarising
yourself, apparently, Bloxham
hoped the RBA’s recycling of its
March statement in April was a
one-off.
“While this approach is a practice
followed by some other central
banks – the Fed, for example – the
RBA usually furnishes us with
delights of an extended vocabulary
from a well-trained and highly judicious
group of wordsmiths. If this
is the new paradigm, like others,
we may have to get a computer to
calculate the number of new words
and use this variation to assess
dove-ishness and hawkishness.
Hopefully it hasn’t come to this. “
In light of Bloxham’s comments,
we’ll be reading the May statement
with more interest than usual.
Conflicts? Bring
it on
You can’t accuse Angela Emslie
of trying to change an awkward
subject.
She was directing audience
questions to the Stronger Super
Peak Consultative Group chair at
last month’s Conference of Major
Superannuation Funds, when Paul
Costello sought clarification of a
query about trustee conflicts.
“I think he’s talking about directors
on multiple superannuation
boards, and whether that’s a problem,”
piped up Emslie, to a mixture
of guffaws and approving murmurs
from the audience.
Emslie is, after all, the chair of
HESTA, and a trustee director of
CareSuper and Vision Super. She
used to be on VicSuper’s board as
well.
You obviously don’t get someone
on the board of both Coles and
Woolworths at the same time, so
Emslie has long had to defend why
it’s okay for her to direct several
super funds that are technically in
competition with each other.
Her chair at CareSuper,
Michael O’Sullivan, believes the
competition between most industry
funds really is only ‘technical’, and
that “the real battleground has been
between profit-to-members funds
and retail master trusts”.
Emslie has always maintained
that if she gets a good idea for one
fund, she shares it with all her
funds to the extent that it’s appropriate
to them.
Costello, for his part, didn’t
reveal whether he thought multiple
directorships were an issue or not.
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