Men Who Killed Qantas - Matthew Benns [71]
None of the speculation was affecting the airline, where it was business as usual. Management called for voluntary redundancies from 50 maintenance crew, 150 long-haul cabin crew, an undisclosed number of short-haul cabin crew and also announced its fourth profit upgrade in a bumper year that saw 86.6 per cent of passenger seats filled on international routes. It anticipated a 40 per cent jump in profit on the previous year, to $672 million.
Meanwhile, the deal was dragging on. Qantas publicly urged the consortium to get on with it. Shareholders dithered, hanging on for a better offer in the light of the revised profit forecast and an improved share price. Airline Partners Australia restructured its deal. At first it aimed to get at least 90 per cent and then compulsorily buy up the stragglers. As hedge funds held out, the consortium said it would buy at least 70 per cent and then have the others on the board as minority shareholders. The deal closed on Friday 4 May 2007 – but if more than 50 per cent of shareholders pledged their shares then they would automatically get a two-week extension. At the time that was seen as a given. The real battle would be to find at least another 30 per cent. Then it all went pear-shaped.
On the evening of Friday 4 May, Geoff Dixon and CFO Peter Gregg were having a couple of drinks in the lobby lounge of the Sofitel Wentworth in Sydney. It was just before 7 pm, the deadline for the crack squad from Macquarie Bank to deliver the 50 per cent of shareholders needed to trigger the two-week extension. It was a time for quiet celebration for the two men as they contemplated a future in which a cashed-up Qantas would, they believed, be free of shareholder constraints. They would also be personally rich. Wealthy enough for Dixon to start his own private charity. The deal, unpopular as it was with the public, staff, unions, politicians and many of the suits in the big end of town, was in the safest of hands. Macquarie Bank was the best in the business at this kind of thing. So when Geoff Dixon’s mobile phone rang just before 7 pm, it was not with the news he was expecting.
The Macquarie team had been struggling to get the numbers. They were relying on Heyman Investment Associates in America, the Qantas shares owned by the Connecticut-based billionaire Heyman family, to get them over the line. As the day wore on they had placed increasingly frantic calls to Heyman’s chief investment officer, Jim Hoffman, to come forward with the shares. But, according to the Sydney Morning Herald, ‘Hoffman had had enough of Macquarie Bank and what he believed was its arrogant approach to the take over. He simply did not believe the bid would fail without his acceptance.’22 Hoffman, like many American investors, believed Macquarie Bank had the numbers and was trying to get the 70 per cent it needed to completely seal the deal in one go. The investors thought they would get more money for their shares later if Macquarie only just squeaked over the line at 50 per cent. Two hours before the bid closed Macquarie was advised to put out a bulletin, a legal document, showing exactly how many shares it controlled. It would have been the proof Hoffman needed to know that the investment bank was not bluffing. For some reason the bankers did not take the advice and Hoffman hung on to his shares. Instead, just before 7 pm, the bankers were calling Geoff Dixon on his mobile phone and saying they were preparing to put out a statement. They only had 46 per cent acceptances for the bid.
‘This is one of the great fuck-ups of the world,’ one senior executive involved in the deal later told the Sydney Morning Herald.23 Several Australian investors contacted by the newspaper immediately after the deal had gone through said they had