Richard Inder: Pared-down report shows new man's influence

Carter Holt Harvey is already a changed company. Its annual earnings, the first under the control of billionaire Graeme Hart, was marked by its brevity.

In the past, journalists and analysts would traipse out to CHH's well-forested campus in Manukau. There we would sit for most of the morning, digesting comprehensive disclosure statements and listening to thorough PowerPoint presentations from the divisional heads. This year, it was a phone conference presented by an outgoing chief executive and much less detailed disclosure statements.

Meanwhile, these earnings show that the company has incurred $35 million of costs linked to redundancies at its Australian packaging business, its wood products business group and at its head office. But the market has been given no indication of the strategy behind the reorganisation, nor even the actions taken.

During the phone conference, Citigroup head of research Mark Benseman recorded his frustration.

"I think it is pretty disappointing there have been people leaving the firm and there has been no announcements to the stock exchange about what has been going on," Benseman said.

He was referring to the departure of executives such as chief operating officer Ian Unwin, commercial director Maree Webster and CHH panels chief executive Ian Myers.

These are not insignificant roles. Their passing on in such rapid succession without comment would be inconceivable under CHH's former owner, International Paper.

Sure Hart controls almost 86 per cent of the company and can largely do whatever he likes, but the detail formerly provided by CHH was exemplary.

Fortunately, minority holders will not be disadvantaged as the impending appraisal report on his latest offer should disclose much that is now lacking.

The point is that change is under way, and this is relevant to the outcome of Hart's latest bid. Prior management's strategy played a much more important role when adviser Grant Samuel assessed Hart's bid last year. This time, Hart's strategy will play a much bigger role.

Hart has a lot going for him. It is only four months since Grant Samuel ran its eye over the books so not a great deal would have changed; certainly the market has not improved greatly.

The structure of the bid, promising a bonus to shareholders if Hart reaches the critical 90 per cent threshold where he can move to compulsory acquisition, provides a strong incentive for investors to get in quick.

The $2.75 offer does not look bad when compared with the $2.50 of the prior bid. Retail investors at least, which are now a minority on the share register, will be feeling pretty smug about their gamble.

Against this is the fact that hedge funds - those weird animals that take a gamble on special situations - represent less than 1 per cent of the share register. They are more likely to accept as a 10 per cent gain in four months looks okay, but they only represent a small block.

Meanwhile, history is against Hart. Many of those who have bought in to CHH would have seen him make huge sums through investments such as Burns Philp, Goodman Fielder and New Zealand Dairy Foods.

They have also witnessed and enjoyed gains made by minority investors in Tranz Rail, now called Toll NZ. Australia's Toll bid just over $1.10 but failed, and the shares are now trading at $3.10. Toll, like CHH, was taken over by an investor determined to get gains.

They are there for the long term. This bid may have some way to run.