Company has confidence in lenders’ backing and sees more change to come but shareholders make frustration felt
McAleese Group will continue restructuring as it looks to ride out the mining downturn, chairman Don Telford tells shareholders at the firm’s annual general meeting.
But shareholder patience is wearing thin with a strong vote recorded against the management remuneration package as earnings are forecast to struggle again.
While backing management efforts to stabilise and diversify the business, Telford warns that economic headwinds will continue to buffet the company.
“Key commodity markets have continued to experience volatile conditions and the capital projects pipeline in the resources sector remains subdued,” he says.
“The competitive landscape has continued to create margin pressure and general freight activity remains soft.”
Despite that, Telford remains confident of its financiers’ backing.
The board “has endorsed a strategic process targeted at finding ways to strengthen our capital structure and has engaged [financial consultancy] Moelis & Co to provide assistance.
“This process has the support of our lenders who agreed to revise the terms of our debt facilities which has provided a period of time for the company to pursue these capital options and strategic processes.”
CEO Mark Rowsthorn says the consultancy’s strategic process examined options including gaining new capital through equity, subordinated capital or replacement debt, though a decision on the way forward was yet to be made.
The need is highlighted by the difficulties faced by its main divisions, with ‘specialised transport’ struggling with lower east-west volumes and pricing pressure across the network and ‘bulk haulage’ woes well documented.
Against that, the ‘oil & gas’ division had a better story, “performing satisfactorily” and looking to renew contracts with major customers.
Management is not immune from change and Rowsthorn reveals bulk haulage divisional general manager Andrew Simpson has been promoted to the new post of group chief operating officer.
“Andrew has a strong understanding of safety and business process and I am confident that he is well equipped to take on this new challenge, with the support of his team and the existing knowledge and skills within each of our businesses,” Rowsthorn says.
Experienced industry identity Warren Saxelby’s appointment to the board was aproved by shareholders.
The company is also looking to harness its workforce assets through a “cultural change program” aimed at “bridging the gaps for our workforce, providing them greater support, improving our internal communications practices and ensuring stronger employee engagement”.
Through the coming financial year, McAleese will focus on integrating its Queensland general freight operations with the existing depot network nationally.
It will also seek opportunities in exploration, construction and production.
Both Telford and Rowsthorn praised the Cootes Transport turnaround, with the latter noting its recent move outside its traditional metropolitan and regional fuel/LPG supply chains and into transportation of other dangerous goods including anhydrous ammonia.
“Consistent with the company’s focus on cross selling and earnings diversification, the Cootes Transport team is also working with McAleese Resources in pursuing fuel and gas transport opportunities in key resource producing regions,” Rowsthorn says in the annual report.
The story of resilience failed to ameliorate shareholders, however, with a strong rejection of the company’s remuneration report.
The rejection marks a ‘first strike’ and a second one next year will allow shareholders to force a reelection of the board.
Also voted down was preformance rights for Rowsthorn.