Rbt? Breathe In, Please

Sydney Morning Herald

Saturday September 25, 1999

By CHRIS TWYMAN

Ralph the Rover came to an untimely and watery end, brought undone by his own dark deed, and the voyage of Ralph the Reviewer around the rocks of the Senate will need some nifty working of the sale. They're rubbery rocks, admittedly, and the good abbott Costello knows the waters.

The build-up to the release of Ralph's report on taxation was pretty encompassing, and if you'd seen the trailers, you'd pretty well seen the movie.

By Tuesday afternoon, interested parties were swooning over the largesse coming their way as a result of the Ralph dissection and suggested redirection. Never mind what that tall bloke who used to run the country said about there being no free lunches. This was free everything plus 10 per cent.

The sharemarket bent its back against international currents, and on a day that saw Tokyo's Nikkei index tumbling 3 per cent, lost at first 8.5 points on Tuesday then gained 2.9 on Wednesday and 25.6 on Thursday. As if unsettled by its own presumption, yesterday it stalled, spiralling down to a deficit of 33.9 points at 2893.

After the initial euphoria, a few other planks also started to spring. The Senate holds the key, and although the changes have a certain official status from next Friday, it could well review the review, with the rising clamour from disparate parties wringing changes.

Property and share investors might get a halving of capital gains tax, but indexation would go. A return of higher inflation would turn that nibble into a big bite. There were voices in the real estate industry making intemperate suggestions that small property investors were being ``conned".

The corporate world was pleased with the prospect of a drop in the company tax rate, first from 36 per cent to 34 per cent and eventually to 30 per cent.

We have our own bone to pick and that's to do with the abbreviation of Review of Business Taxation to RBT.

Our most recent familiarity with these initials comes from having a small electronic analyser pushed at us through an open car window by a very young, very tall and very polite policeperson who suggested we empty our lungs. We hope that in that parallel universe of taxation utopia coming our way, we will not be asked to empty our pockets.

We like Ralph the Rover for whom the bell eventually tolled, and we like Ralph the Rag, that fine magazine put out by the JaKe Combine, because of its anatomical interest and restrained sprinkling of polysyllables. We just hope that Ralph the Reviewer becomes Ralph the Reformer and finally is canonised as Ralph the Redeemer. We do not share the sentiments of Lisa Suckdog's musical exhortation Kill Ralph.

TWICE SMITTEN

Applying great disbelief to the maxim that lightning never strikes the same place twice, the punters are rushing the latest offering from Telstra $4.50 on the table for each share in the next 16 per cent of the carrier, and the rest of the as yet to be defined amount in a year's time. Share applications from small investors were already above $600 million in the first three days of the offer.

The Government's target is to move about half of the $17 billion second tranche share offer to private investors before the public offer closes on October 7 and brokers have been urging clients to send in their applications in case the doors shut early. Brokers' private clients will get 20.5 per cent of the 2.13 billion shares, with much of the demand likely to come from the 1.8 million who registered for a piece.

Telstra's managing director of finance Paul Rizzo headed off to Singapore leading a sales team, with demand from there being seen as a lot stronger than two years ago when the region was drowning in economic problems. Asian investors took just 3 per cent of the first tranche. Next stop is Europe where demand is expected to be in line with the 9 per cent taken in T1.

Rizzo has also landed in the chair at the Federal Government's Federal Reporting Council, the body set up to oversee corporate reporting rules.

COURT CAPERS

All this schmoozing and Mr Nice Guy frottage by Telstra is all very well, but as shareholders, we prefer our telecommunications giants to be decidedly on the ugly side. So it's good to see it in court with the Seven television network in a squabble over access to pay TV cable.

Telstra and Foxtel are claiming they have an agreement predating the Telecommunications Act and are thus free of last month's ruling by the Australian Competition and Consumer Commission that competitors should be given access.

Seven wants declared invalid the exclusivity agreement between Foxtel and Telstra, the duo's reason for refusing access. It wants to show its C7 sports channel and to run additional coverage of the Olympics.

Possibly taking a cue from the boss's handbook of creative kneecapping, Telstra employees are pushing for a $100-an-hour bonus on top of their wages if they have to work this coming New Year's Eve and New Year's Day. Who do these people think they are? Trainee public relations persons? Underpaid plumbers? What will they be asking for a year later when it really is the end of the Millennium?

LATER, RON

Seven could also be facing a bit of heat coming from the direction of Sir Ron Brierley's Guinness Peat Group, with speculation that it is building a stake in the network. GPG has $450 million in the kitty from selling its controlling stake in insurer and funds manager Tyndall Australia. After building up stakes in Australian and UK companies, GPG is shaping as more of a corporate raider than it was through most of the 1990s.

THE COKE CHOKE

San Miguel's supremo Eduardo Cojuangco is not going to take a loss on his 21.5 per cent stake in Coca-Cola Amatil, and has pulled the plug on its sale. The shelving of the expected $1.2 billion sale will now reactivate a clause restricting the Philippines group from selling the bulk of its 219 million shares until mid-2000 without approval from CC-Amatil's board.

It's been a stop-start affair, being called off on Tuesday after weak demand by overseas institutional investors suggested a price around $4.90 a share compared with San Miguel's estimated break-even point at $5.50.

Warburg Dillon Read and ABN Amro Rothschild got things going again, cancelling all existing offers and calling for bids at $5.

San Miguel is sitting on its cards, but Woolworths is ready to fold over its women's clothing chain Rockmans. Warburg Dillon Read will also oversee this sale. Woolworths is coy on price, saying only that it will be tagged in the ``tens of millions" and there already had been ``double-digit inquiries from both local and overseas investors". Rockmans has turnover of about $150 million and in the latest year profit was halved to $3.5 million.

LOWER TOWER

New Zealand's Tower Corp is getting the fallout from the malaise in the insurance sector, with the coolness from fund managers to its planned $290 million float making it likely to go out at the lower end of the price range.

Tower, in the process of demutualising, will list on both sides of the Tasman with a market worth of about $NZ1 billion making it about the 12th biggest listed company in New Zealand and taking it into the ASX Top 100. Australians will hold about 40 per cent and Kiwis 50 per cent, with the rest in international hands.

Another Kiwi group likely to make an impression here is the efficiently run Telecom NZ if it gets hold of AAPT, for which it is bidding $5.10 a share. It has its eye on a cost-cutting and operations rationalisation. But it still wants AAPT's Larry Williams to run the shop.We don't really have much to say about John Elliott's position this week, other than that he's backing Carlton in the AFL grand final, being held in Kennetia's provincial capital this afternoon, so he has enough grief already. The Laws Clause: Henry Walker Eltin, Telstra, Woolworths.

ctwyman@mail.fairfax.com.au