Interesting article in todays Australian on the CEO of QGC and the takeover of SGL.
malachii
THE AUSTRALIAN
BUSINESS
Gas exec is desperate and dateless
Cottee awaits a response to his bid, writes Glenda Korporaal
February 13, 2006
QUEENSLAND Gas chief executive Richard Cottee says he feels a little like his younger days at school dances, waiting to get a girl to agree to dance with him.
Having launched an unsolicited bid for Sydney Gas in late January, Cottee is awaiting a response from the company that is still coping with last year's senior management changes and working out how to repay $30 million in convertible notes due in coming months.
The rapidly growing Queensland Gas is expected to lodge its bidder's statement with the Australian Securities and Investments Commission tomorrow.
If Cottee pulls off the surprise 2-for-1 script bid, he will be running a big player in the emerging market for coal seam methane gas in Australia.
Cottee has grand plans for the combined company to be able to supply both the gas and the electricity markets in southeast Queensland and NSW with strong links to power stations in southeast Queensland and NSW's Hunter Valley.
But, so far, Sydney Gas (which has seen off two chief executives and two chairmen in the past year, including former Olympics minister Michael Knight) has made no comment on the bid.
Sydney Gas executive director Stephen Kwik says the company is awaiting the bidder's statement before making a comment.
"I have been trying to ring (Sydney Gas chairman) Michael Norster to meet with him but he hasn't returned my calls," Cottee says. Sydney Gas currently has no chief executive, after chief executive and chairman Knight left in tumultuous circumstances late last year.
Knight called for an ASIC investigation into whether the company had changed hands without investors receiving a takeover bid.
The investigation was completed last month, with ASIC deciding to take no action.
Cottee spent last week in Sydney pitching to Sydney Gas shareholders, including Mulpha International, a company controlled by Lee Seng-Huang, son of Lee Ming Tee, which holds just under 10 per cent.
Mulpha insists that it has nothing to do with the controversial Lee Ming Tee, who was jailed for a year in November 2004 in Hong Kong for offences connected with his Allied Group of companies, after a long-running legal battle.
The outgoing Cottee, a fluent Japanese speaker who describes himself as a "reformed lawyer", is making a bid for a company once several times the size of Queensland Gas.
But a combination of Sydney Gas's problems and Queensland Gas's successes have put him in striking distance of a company he has coveted for some years.
In 2002, Cottee left the job as chief executive of the Queensland government-owned power company CS Energy, which has assets of almost $2 billion, to join the much smaller publicly listed Queensland Gas.
While the coal seam gas industry in Australia is still in its infancy, it gave the energetic Cottee, whose career includes stints with gas producer Santos and coal producer Oakbridge, the chance to get back into a more entrepreneurial world.
Cottee points out that he has taken Queensland Gas from a market capitalisation of about $15 million in 2002 to its current level of about $300 million.
He says his job when he arrived at Queensland Gas was to "get its house in order" -- including proving up its reserves and securing contracts for its gas -- but he is now in a position where he can start to look further afield.
Cottee says he has already teed up three major Queensland Gas shareholders to take $30 million worth of stock in the combined company to pay out the $30 million in convertible notes owned by Sydney Gas.
Cottee says he wants to replicate what he has done with Queensland Gas, where he has proved up reserves in the Surat Basin and has been involved with the establishment of a gas-fired power station at Chinchilla which can take its gas.
He sees a similar opportunity with Sydney Gas's interests in the Hunter Valley.
Having reserves and links with power stations in both the Surat Basin and the Hunter Valley, he says, would give the combined group access to supply at both ends of the NSW-Queensland electricity interconnector.
It could choose either to sell its gas directly to consumers or to power stations to meet electricity demand in either state.
The two companies are in very different situations. Queensland Gas has significantly boosted its proven reserves but is still looking for supply contracts.
It has proven and probable reserves of some 336 petajoules in Queensland -- more than 10 times the reserves of Sydney Gas in the Sydney Basin areas, which include the Hunter Valley and Camden.
Queensland Gas has 10-year minimum supply contracts of some 11.6 petajoules a year, with fertiliser company Incitec Pivot, Braemar Power and Cottee's former employer, CS Energy.
Sydney Gas has a larger contract with AGL, one of Australia's biggest energy retailers, to supply gas from its Camden project.
"Sydney Gas has the contracts but it doesn't have the proven reserves," Cottee says. "(If we win the bid) we will first and foremost help (Sydney Gas) prove up its reserves (at Camden) to satisfy the present contract."
Cottee, who learnt Japanese as an exchange student at high school, insists that he is "old and grey and boring", unlike some of the colourful characters involved in the small cap stocks in the Australian mining industry.
But others see him as a robust, outgoing personality. His PR advisers have suggested he tone things down for the more sedate Sydney institutional market.
Wilson HTM energy analyst Andrew Pedler says Cottee is regarded as a successful and energetic leader, having boosted Queensland Gas's business by bringing in a team of professionals in the industry whose skills are bearing fruit.
Cottee points out that he has come a long way since those awkward dances in his school days. He is now happily married with six children -- all of them, he points out cheerfully, with the same wife.