There are some who believe that the takeover bid for Santos is not fair dinkum. These vile cynics claim that Scepter Partners’ finely priced $7 billion offer may just sort of … vanish.
They even allege, now that the share price of Santos has jumped in the aftermath of the grand takeover announcement, that this may be the prelude to a $2.5 billion rights issue.
These of course are scurrilous accusations that should not be tolerated. The dignity of Australia’s capital markets is at stake. This ghastly and loathsome speculation must be debunked.
To begin then, the head office of Scepter Group is Bermuda, a land well known for its openness and its accountability.
It is true that there is not much information in the public domain about Scepter Partners but we do know from reliable press reports that “sources close to Scepter” believe that Scepter has been around for many months now. Not just days, but months and months.
The chief executive is none other than Rayo Withanage, “an expert in mergers and acquisitions who was a brilliant law student at the University of Auckland and then completed a master’s degree at the London School of Economics”.
Reputed to be “one of the most influential financiers in Asia and the Middle East”, Withanage officially assumed the role of chief executive of Scepter many weeks ago. This lends a vital freshness to the bid.
Although Scepter appears to have been formed in only 2015, its corporate forebear is the venerable BMB Group, a “powerful ultra-high-net-worth fund” that was established in 2006 and has a long history of astute investment.
According to BMB’s Wikipedia entry, Rayo Withanage “recently handed the reins of BMB to new CEO Rahula Withanage” – believed to be another family member of the Withanage dynasty.
Scepter and BMB, being leading financial institutions, play their cards close to their chest so there is not much information about their corporate activities but we did piece together a list of their previous takeovers.
According to a Bloomberg report of October 2010, the BMB juggernaut offered to pay “as much as $US4 billion for Kerzner International Holdings, the hotel and casino company that built Atlantis in the Bahamas and Dubai”.
Kerzner’s founder, Sol Kerzner, received a letter on October 11 “offering to pay $US3.4 billion to $US4 billion … according to a copy obtained by Bloomberg News”.
The trail runs dead at this point. Nevertheless, we have no reason to suspect that BMB did not have access to the money. For all we know, the leading financiers may have turned up with $US4 billion in cold hard cash in the back of a pick-up truck.
There are no other takeovers by BMB that we could find, so there is only one takeover on the BMB takeovers list but it is a takeovers list nonetheless, even if there is only one takeover on it, that didn’t appear to have happened.
According to the Scepter website, the directors include His Royal Highness Prince Abdul Ali Yil Kabier and his Royal Highness Prince Bahar Bolkiah, both of the Royal family of Brunei.
The father of Prince Bolkiah is world-renowned. He is Prince Jefri, deemed to be the greatest hedonist in recent world history. Prince Jefri was charged with stealing $US14.8 billion from Brunei when he served as its finance minister.
During his 15-year tenure Jefri managed to make $US40 billion in “special transfers” from the nation’s accounts. However, he managed to use or pay to himself only $US14.8 billion of that.
Sadly for Jefri, he was ordered to return assets including “over 600 properties, over 2000 cars, over 100 paintings, five boats and nine aircraft”, as well as billions of dollars in possessions he had stored in 21 warehouses.
Besides running money for the Brunei royal family, Scepter is also represented by interests from the United Arab Emirates.
This is what makes the move on Santos particularly compelling. If Scepter wins control of Santos, it will not only get Santos’ $10 billion in debt but it will also get Santos’ oil and gas assets – just what the ruling families of Brunei and UAE desperately need; more oil and gas to complement their existing oil and gas assets.
As Santos’ bankers put it, this is a very strategic bid. It is win-win. And it is a good thing it came along when it did because the stock finished September at a low of $3.98.
No doubt fired up by the glowing prospects of its strategic asset sales program, Santos shares then rallied in early October, reaching almost $6 even before the takeover bid was publicly announced on October 22.
It has mostly traded above $6 since then but it is mystifying that the shares closed at $5.91 last week, so far below the $6.88 a share offer by the leading Bermudian financier.