Takeover Success To Pay Off

The Age

Wednesday December 3, 2008

IAN McILWRAITH

COMPANIES associated with directors of the listed cashbox Coneco could reap more than $350,000 in fees if its reverse takeover by former Pyramid Building Society chief Bill Farrow's company succeeds.

Mr Farrow and former America's Cup skipper John Bertrand will each get $500,000 in cash as a down payment for Coneco's $10 million acquisition of their film footage company, World Wide Entertainment.

Details of the financial relationships between Coneco's existing directors and the incoming Farrow team were revealed in a 97-page information memorandum sent to Coneco shareholders this week before a meeting to vote on the WWE purchase on January 5.

Coneco chairman Bill Conn owns half of CONDOD Film Finance, WWE's largest financier, which stands to get a bonus payment of more than $200,000 when control of the Farrow family company changes hands. CONDOD has loaned $1.4 million to WWE since mid-2007 at an effective interest rate of 25 per cent.

Mr Conn said last night he was unaware of CONDOD's bonus when the deal was done, and the money was not going to make any difference to his life.

"I have 4 million shares in Coneco - for every cent they go up, I get $40,000. That's what's driving me," he said.

He said while Coneco might have 7.5 a share of cash in the bank, compared with its 6 market price, at least 1 of that would be lost in paying advisers and other costs if the company was wound up instead.

He said the WWE deal had more potential value for shareholders. He will not vote on the WWE acquisition because of his financial interest.

Coneco's former chairman Stuart James, who quit the day the WWE deal was unveiled, is also a director and shareholder of Balnave Capital Group, which provided corporate advice to Coneco on the acquisition and will receive up to $150,000 if it is approved.

Mr Bertrand's family controls 46 per cent of WWE. Mr Farrow and his family, including WWE's managing director Jonathan Hutchings who is his son-in-law, own the rest.

They will finish with a collective stake of up to 66 per cent in Coneco, which also has to issue shares to increase the number of investors from 120 to 400 or face potential delisting by the stock exchange.

WWE is forecasting a 50 per cent leap in sales to more than $10.4 million this financial year, driven by the falling Australian dollar because most sales are written in US currency, and a more than doubled pre-tax profit of $1.98 million.

© 2008 The Age

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