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Wednesday
Jan062016

The Dick Smith Equity Heist

Having recently paid $6 for earphones marked at $24, and $8 for a box of AAA batteries marked at $40, I realised that Dick's old chain was heading for the knackers yard, but I did not realise the full extent of the ruthless throat cutting that had been perpetrated by a bunch of Sydney whizz-kids called Anchorage Capital Partners - mainly ex Macquarie Bank types who have perfected the takeover and float scam.

Here is the full sorry story published in Bristlemouth - a reputable Australian investment blog, about just how they acquired Dick's from Woolworths for about $20m cash on the table, together with a whole heap of scammy capital contributions making up around $120m, and then set about devising a float that scored them $520m from the unwitting public, and no doubt a large number of investment houses looking to place the investment funds of their clients. This was achieved through the rapid disposal of stock that in turn allowed the creation of totally fanciful future projections to support the float figure - an 'oldie, but a goodie' in the industry!

It is an object lesson in just how deeply compromised our capital markets have become when this kind of activity is allowed, even encouraged to continue through laissez faire market regulations that are in place both in Australia, and unfortunately here in New Zealand.

The concentration in our news media - particularly RNZ on the plight of gift card holders, and the usual bleating of the Consumer Institute completely overlooks the thousands of people who have been scammed out of their direct, or indirect investment savings in Dick Smiths by Anchorage. Here are the partners responsible - all good clean-cut lads from the merchant banking industry who have planned their little heist from high above George Street - a favourite lair.

Appeals by the redoubtable Dick Smith for these people to consider reimbursing those who have put down deposits on purchases, and gift cards and deliveries will be met with raucous laughter in the Anchorage boardroom - these people don't think along these lines - they have grown up the 'greed is great' era, and long ago adopted the Gordon Grecko credo which eliminates any conscience driven action of that nature. Suckers are suckers, no matter where!

Highway robbery it is, by any other name! On the other hand, how often does the lesson need to be learn't? Here is a post on the matter on 30 October (the day after the original post) on the matter by Steve Johnson that expresses no sympathy for Dick Smith investors, and takes the "let the buyer beware" viewpoint.

 

 

 

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