Pacific National CEO resigns

David Irwin has stepped down from his role as CEO of rail freight group Pacific National, citing a desire to be closer to family.
“After 10 years predominantly working away from my home in regional NSW I have decided the time is right to put my family first,” Irwin told his staff in a note, adding that Pacific National is at the beginning of a “great new era of development as a stand-alone company.”
The Australian Financial Review (AFR) first revealed the leadership change, noting that Irwin had stayed in the role just six months after the company split of Asciano.
Irwin will remain in the role until a new CEO is found, and reportedly will then stay involved in an advisory capacity.
Irwin ran Pacific National’s coal haulage business for eight years, and was on the former Asciano executive team.
Global Infrastructure Partners’ Russell Smith is likely to take on many of Irwin responsibilities, the AFR reports.
Smith was part of the Global Infrastructure Partners team that bought a stake in Pacific National as part of a consortium of international funds last year. He sits of Pacific National’s board and has been appointed Executive Chairman on an interim basis.
 

Asciano recommends Qube Consortium Proposal

Asciano Limited announced on 8th February 2016 that it had received a revised proposal from Qube Holding Limited, Global Infrastructure Partners, Canada Pension Plan Investment Board and CIC Capital Corporation to acquire up to 100 per cent of the issued capital of Asciano. 

As required under the amended Bid Implementation Deed between Asciano and Brookfield, Asciano issued a notice to Brookfield Infrastructure with a right to submit, within five business days, a matching or superior proposal to the Qube Consortium Proposal.

The Asciano Board recommends that Asciano shareholders accept the takeover offer to be made under the Qube Consortium Proposal in respect of all of their Asciano shares, subject to:

  • Asciano not receiving a superior proposal; and
  • An independent expert opining that the takeover offer and the sale of each of the Ports and BAPS businesses is fair and reasonable to Asciano shareholders.

Asciano has now signed binding transaction documentation with the Qube Consortium including an implementation deed in relation to the takeover offer, together with sale agreements in relation to Patrcik's container terminal business and a 50 per cent interest in Australian Amalgamated Terminals and the Bulk & Automotive Port Services businesses and a 50 per cent interest in ACFS Port Logistics.

The Brookfield BID will now be terminated and the Brookfield takeover bid is expected to lapse at 7:00pm on 18 February, 2016. 

Asciano will also apply to the court for orders to cancel the Scheme Meeting in respect of the Brookfield Offer.

As a result of the change in recommendation in favour of the Qube Consortium Proposal, a break fee of $88 million will be paid to Brookfield Infrastructure. Asciano will treat the break fee as a material item of $88 million pre tax in its FY16 full year financial results

New timeline announced for both proposed acquisitions of Asciano Limited

The Australian Competition and Consumer Commission has set a new indicative decision date of 24 March 2016 for its consideration of the acquisitions of Asciano Limited.

For the Qube consortium acquisition, the previous indicative decision date of 18 February 2016 was set on the assumption that the transaction structure would be finalised earlier in the ACCC's review. However the transaction structure was not finalised until 28 January 2016.

According to ACCC Chairman Rod Sims, the ACC would require further time to consider issues raised by market participants about the undertakings that have been offered by Brookfield and to consider further revisions of those undertakings offered last week by Brookfield.

"The ACCC requires time to consult on Qube's transaction structure, given we have only had details of the structure for a very short period," Sims said.

"We also need to consider whether revised undertakings offered by Qube can be consulted on, and if so, time for that consultation to take place."

The indicative decision dates for one or both matters may change again. Although the decision dates are currently aligned the ACCC may finalise its consideration of one proposed acquisition prior to the other.

Asciano to slash costs and jobs

Transport and logistics operator Asciano has announced plans to slash $250 million in spending with jobs cuts expected, blaming tough economic conditions.

The company has cut capital expenditure this year from $700-800 million to $575-625 million.

"If soft economic conditions continue into FY14 management has further flexibility to re-phase capital expenditure to more appropriately align with top line growth," the company said in a presentation to the Macquarie Australia Conference in Sydney.

SMH reports that affected projects could include new trains and freight terminals in the Pacific National Rail coal network.

The company said that some redundancies would now be pushed forward into this quarter instead of waiting until the end of 2013.

The company's latest quarterly update showed its Pacific National Rail volumes fell 3.4 per cent, which it blamed on soft volumes.

It showed that container volumes at its ports also dropped by 4.1%.

However despite falling volumes, the company said it still expected revenue fore the second half of the year to be up.

Earlier this year, the company posted a net profit of $199 million for the six months to December, a 7.45 per cent increase on the same period last year.

The report trumped analyst expectations of $171 million profit, with the company declaring an interim dividend of 5.25%, fully franked.

The result was driven by volume growth in Pacific National Coal following new contacts in Queensland, and growth from contracts in the Hunter Valley, the company said.

Asciano post huge profit jump

Transport and logistics operator Asciano has posted a net profit of $199 million for the six months to December, a 7.45 per cent increase on the same period last year.

The report trumped analyst expectations of $171 million profit, with the company declaring an interim dividend of 5.25%, fully franked.

The result was driven by volume growth in Pacific National Coal following new contacts in Queensland, and growth from contracts in the Hunter Valley, the company said.

Its port business also grew in volume due to an increased activity from the resource sector and record imported car volume growth in 2012.

"We are particularly pleased with this result in light of the very soft first quarter market conditions across most of our businesses, which made forecasting customer demand and responding with the appropriate level of resources extremely challenging," Asciano's chief executive and managing director John Mullen said.

Mullen said with two strategic multi-year capital projects in PN Coal and the commencement of a new project which will see the container terminal at Port Botany expand, the company will continue to drive strong returns on its investments.

"We continue to believe that, based on the long-term customer contracts that underwrite all four divisions, we will report long-term earnings growth in line with previous forecasts, albeit the mix and timing will be slightly different from original forecasts given the variable market conditions’’.

Image: asciano.com.au

Coal haulage derailed in NSW

Coal haulage in NSW will come to a standstill this week as Pacific National Coal digs its heels in over a wage dispute with workers.

Asciano today announced that the NSW operation of its coal division, Pacific National Coal, will shut down for a minimum period of 24 hours on Friday after negotiations to finalise a new enterprise agreement with the Rail, Tram and Bus Union (RTBU) failed.

RTBU members voted overwhelming in favour of taking protected industrial action in December.

Loco Division Secretary Bob Hayden said the strong vote in favour of action shows just how serious workers are about getting a fair deal.

“We don’t want to have to take protected industrial action, but Pacific National has left us with no choice but to go down this path.

“Workers deserve a fair deal, and members have shown they are prepared to keep going until we get one.”

The dispute for the new enterprise agreement has lasted over 12 months, and Asciano said they have ‘bent over backwards to finalise the EA’.

The transport and logistics operator offered its 840 NSW employees an annual wage  increase of 4% each year for the three year deal, with an additional $2,500 in backpay.

RTBU members at Pacific National Coal (almost 80 per cent of workers) voted against the company’s enterprise agreement.

Hayden said he was glad that members didn’t settle for the company’s EA.

“It’s great that the membership have voted ‘no’ and are willing to hold out until they get a fair deal,” Hayden said.

The RTBU has accused the company of using bullying tactics after a letter was sent to members stating that if an agreement was not reached by January 31, the wage offer would drop to 3 per cent and then to 2.5 per cent if an agreement was not reached by February 28.

“This letter is nothing short of a bullying tactic by management and a disgraceful attempt at genuine negotiation with its employees,” Hayden said.

“We want fair and reasonable negotiation – and that doesn’t mean giving us timelines by which we need to agree to their terms. It means genuine negotiation until we reach an agreement both parties are happy with.”

However Pacific National Coal Director David Irwin said the RTBU were refusing a generous wage offer.

“In an increasingly challenging economy where we are seeing extensive job losses and mine closures amongst our customers, we have offered a very generous wage increase of 4 per cent each year, against the RTBU’s exorbitant publicly stated wage claim of 9% and 7%.”

“The RTBU’s behaviour is now set to hurt the hip pockets of our employees and their families, and bring unnecessary hardship and economic harm to our customers,” Irwin said.

Irwin said the 24 hour stoppage means Pacific National will be unable to load, haul or unload its coal trains in NSW, preventing at least 300,000 tonnes of coal from reaching the port.

The company estimates the exports are worth over $25 million to the NSW economy everyday.

Pacific National signs train services contract with natural resources company

Asciano’s Pacific National Coal haulage business has entered into a new train services contract with natural resources company BHP Billiton Mitsubishi Alliance (BMA).

The contract will provide the support functions of maintenance and daily servicing for the four BMA train sets planned for use in the Goonyella coal system to the BMA owned Hay Point coal terminal.

Asciano will use its newly constructed train support facility at Nebo to provide locomotive and wagon maintenance functions for BMA. 

“We are extremely pleased to have signed this long term agreement with BMA and we look forward to the arrival of the first train set in the second half of 2013,” Asciano CEO, John Mullen said.

$348m to redevelop terminal at Port Botany announced Asciano

Asciano has announced plans to invest $348 million to redevelop and expand its container terminal at Port Botany for transforming the terminal into a world class and internationally competitive facility by 2014.

This comes across as welcome news to every Australian business which relies on improved port efficiency and productivity to keep their costs down.

Australian Logistics Council (ALC) Managing Director, Michael Kilgariff says, “the keys to unlocking greater productivity on our waterfront come in the form of capital investment and progressive labour reform.”

There will be an increase in capacity from 1.15 million to 1.6 million TEU per annum to meet current trade growth forecasts.

Kilgariff went on to say that ALC commends Asciano for its commitment to improve supply chain efficiency and taking positive steps to prepare for future trade growth at the port.

McKinsley Global Institute’s recent report stated that introducing new operating models within individual companies, such as automating supply chains, could boost productivity

The Maritime Union of Australia is threatening Asciano with an international campaign to disrupt the company’s Port Botany operations.

Asciano, like all Australian companies, must be allowed to manage its affairs in a way that it deems appropriate to generate greater efficiencies and improved safety outcomes.

The introduction of automation at Asciano’s Brisbane terminal has improved productivity and led to a 90 percent reduction in safety incidents.

Actively encouraging Asciano’s international customers to avoid its facilities is another example of a union trying to exert greater control over the way a business runs its operations.

“This sends out a very worrying message to any business trying to improve productivity and harm our international reputation as a place to do business,” Kilgariff said.

None of this is in Asciano’s, their employees or Australia’s long term economic interests.

ALC said in a statement that it is looking forward to Asciano being able to roll out its redevelopment fully in due course.

Patrick Terminals EA negotiations at deadlock

Asciano has confirmed that negotiations for a new Enterprise Agreement (EA) for its Patrick Terminals workforce have broken down, with the Maritime Union of Australia (MUA) refusing to allow the Fair Work Australia (FWA) to broker discussions in conciliation.

The company released a statement on Friday saying that it is disappointed by the Union’s “point blank refusal” to engage in the Fair Work process. Negotiations are now at a deadlock after the MUA walked away from talks on Friday.

“We were confident that we would be able to conclude and finalise the EA for the sake our workforce, customers and the broader Australian economy, but MUA just doesn’t share this objective,” Patrick Terminals and Logistics director Alistair Field said in the statement.

“After 18 months of negotiations and more than 60 stoppages across Patrick’s operations costing the Company more than $15 million, this was the perfect opportunity for the MUA to display good faith and close out the few outstanding items that remain.

“We are bitterly disappointed that the MUA was not prepared to even clarify its position regarding the few outstanding items. This is an open rejection of good faith bargaining that flies in the face of the Fair Work Act.”  

In the statement, Asciano claimed to have “proactively sought” to conclude the EA negotiations on behalf of its Patrick terminals employees. The company said that MUA’s “erratic behaviour and stalling tactics continues to frustrate and delay the process”. 

Asciano applied to FWA for conciliation on Friday 9 March after the MUA recently reneged on agreed terms from an in-principle agreement announced by both the MUA and Asciano in November last year.

This is despite Asciano paying a 5% good faith, salary back payment to its workforce in December last year.

The MUA and its members have also been found to have been engaging in unprotected activity in the form of a “go slow” at Patrick’s Port Botany container terminal causing productivity at the port to drop by 30%.

On Wednesday last week, Fair Work Australia ruled under S418 of the Fair Work Act that the action of the MUA and its members was illegal and ordered that the “go slow” cease immediately with the Order remaining in place and covering all forms of unprotected action including “go slow” for three months. 
 
The MUA is also currently engaged in a series of planned protected strikes at Patrick’s Fremantle container terminal, which commenced last Thursday morning. 
 
The action will stop the movement of approximately 65% of containerised trade at the port, impacting 8 ships and 6,720 containers with time sensitive cargo including refrigerated food and drinks, as well as essential mining, earthworks and agricultural equipment. The stoppage will then be followed by an indefinite period of rolling stoppages and work bans. 
 
“This will have a significant impact on Australian importers and exporters, hurting everyone from Australian farmers and manufacturers exporting their goods to market, small businesses awaiting deliveries and the transport industry who rely on container trade to make a living,” Field said.
 
“We are committed to finalising the EA negotiations and are confident that we can resolve the few outstanding issues within the Fair Work process, which is the proper way to handle this dispute, not by strikes which disadvantage Australians and damage and hurt the economy.”  
 
 
Further ongoing disruptions are also likely at Patrick’s Fremantle container terminal as a result of a separate strike between the MUA and Patrick’s maintenance contractor ATIVO which commenced at Patrick’s Fremantle terminal on Thursday last week.

While the dispute is not related to Asciano or Patrick it significantly impacts the company’s ability to operate, service its customers and provide gainful employment for its workforce due to restrictions around the maintenance and operation of stevedoring equipment. This strike action was scheduled to conclude on  Sunday at 6.29am.
 
According to the company, the knock on effect of the MUA’s actions will be felt by Australian importers and exporters for the next month as vessels are significantly delayed and international schedules directly impacted. 

 

Change of guard at Asciano

Two of Asciano’s senior managers are set to depart the company in the near future, prompting an internal reorganisation.
 
First to go will be Doug Schultz, the current divisional general manager at Patrick’s Container Ports division. He will be departing in less than two weeks on 14 August, “in order to pursue other career opportunities”, according to a media release issued by Asciano.
 
Doug Schultz has been in his current job for five years and has overseen a number of significant projects: the automated straddle container terminal and Beth 10 in Brisbane, the redevelopment of Port Botany Terminal and the (so far flawed) introduction of the rail-mounted gantries (RMG), the expansion of Patrick’s East Swanson Dock in Melbourne, and the creation of Patrick Port Logistics (from Patrick Portlink and Patrick Port Services).
 
Paul Garaty, currently the head of Pacific National’s intermodal services will step into Mr Schultz’s role.
 
Paul Garaty’s position, in turn, will be temporarily filled by Asciano’s current COO, Don Telford. However, Mr Telford intends to retire as soon as a permanent replacement is found for the job, to be re-titled “Divisional General Manager, Intermodal”. The appointment is expected to be finalised by the end of the year.
 
All divisional managers in the future will report directly to Asciano MD and CEO Mark Rowsthorn.

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