Corrigan to depart as Qube stars align


Good regulatory news comes as handover is announced

Corrigan to depart as Qube stars align
Qube is going places as Corrigan plans to go.

 

After what chairman Chris Corrigan notes was a transformative financial year for Qube, the competition watchdog shined on his last annual general meeting.

One of the driving forces in the creation of Qube, Corrigan will hand over the chair to fellow Patrick Corporation veteran and present non-executive director Allan Davies next June.

"This seems an appropriate moment in Qube’s development for a change of Chairman to Allan who has been with the team as an executive at Patrick and as a Qube director since its formation," Corrigan says.

"Allan has strong implementation experience and the commitment, time and energy to assist Maurice in the period ahead.

"I have the utmost confidence that the team at Qube, many of whom I have worked with for the past 25 years, will bring our vision to a reality that will impress and reward all our shareholders."

Corrigan will remain as director of the current incarnation of stevedore Patrick Terminals following last year’s takeover and calving from Asciano, "as we bed down that acquisition".

The revelation yesterday came as the Australian Competition and Consumer Commission (ACCC) says it will not oppose Qube’s acquisition of the 50 per cent interest in Australian Amalgamated Terminals (AAT) owned by Brookfield Infrastructure Partners, which Qube partnered to gain Patrick.

The purchase price of $150 million before completion adjustments includes Brookfield’s shareholder loan and will be funded from existing cash and debt facilities, Qube says, and will be finalised in coming days.

"The Patrick investment will be an important component of Qube’s long term earnings and extend the company’s supply chain capabilities to national container ports enhancing our ability to deliver efficient logistics solutions to our customers," Corrigan says.

Shareholders indicated their approval of the direction of the company, with the maximum vote against any of the nine AGM resolutions failing to top 5.5 per cent.

A bolstered dividend will have been boosted their humour.

"The fully franked final dividend of 2.8 cents per share maintained the full year dividend at 5.5 cents per share," Corrigan says.

"Whilst this is above Qube’s target payout ratio of 50-60% of underlying earnings per share, the Board believes it is appropriate taking into account Qube’s strong cashflow, positive long term outlook and the dilutionary impact that the capital raising for the Patrick acquisition had on Qube’s FY 16 earnings per share."

As for the ACCC, chairman Rod Sims says: "The court-enforceable undertakings we have from Qube address the ACCC’s concerns about competition in the supply of vehicle stevedoring, vehicle inspection services, and general cargo stevedoring services at the Ports of Brisbane, Kembla, Melbourne, and Adelaide."

Although the undertaking relates to all four ports, AAT’s operations in Melbourne and Adelaide are expected to cease in 2017.

"The consultation with users of AAT terminals has led to important changes to the undertaking and has resulted in AAT being subject to a stronger set of obligations," Sims says.    

The undertaking prevents AAT from discriminating against current and potential competitors to Qube for the supply of stevedoring and vehicle inspection services, the ACCC adds.

The undertaking will also compel Qube and AAT to comply with access and berthing allocation rules, and ring-fence confidential information supplied to AAT by Qube's competitors, shipping lines, and car manufacturers.  

"The undertaking also contains rigorous price and non-price dispute resolution mechanisms. We expect that users of AAT’s terminals will be active in pursuing dispute resolution options and raising potential discrimination issues," Mr Sims said.

An independent auditor, who will report to the ACCC, will also assist in ensuring that Qube and AAT are meeting their obligations outlined in the undertaking.

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