Corporate raider’s swipe at profits as battle for Cromwell gets personal

Australian businessman Gary Weiss has raised questions over the Cromwell’s financial reporting as the two sides continue to contest ARA’s proportional takeover of the $2.6 billion Brisbane real estate company.


Sep 03, 2020, updated Sep 03, 2020
Cromwell chair Gary Weiss  (Photo: AAP Image/Dan Peled)

Cromwell chair Gary Weiss (Photo: AAP Image/Dan Peled)

Weiss, who claimed he had been trying to resolve issues between ARA and Cromwell behind the scenes for more than a year, is vying for a seat on the board of the company along with Joe Gersh at a security holders meeting later this month as ARA nominees.

ARA already owns 26 per cent of Cromwell bidding for 29 per cent of stock they don’t already own and is disputing claims from Cromwell that it is “control by stealth”.

“Now is not the time but I would welcome the opportunity to talk about quality financial reporting. For example, there are points that are significant like (Cromwell’s) one-off development profit that was included in operating earnings. The profit was achieved, but operating earnings usually don’t reflect one-off transactions. But these are audited accounts and I am not commenting adversely on that, but in the companies I am involved in I am very conscious of how you treat one-off results for example.

“ARA has said operating earnings need to exclude one-off development profits.”

In its supplementary bidder’s statement ARA also said Cromwell’s recent profit showed the company continued to underperform and it has attacked Cromwell’s investment in Polish shopping centres, an asset class which have been adversely affected by the pandemic.

This month’s vote will Weiss’s third attempt at a board seating after getting 49 per cent of votes in November. He missed out again in March which he said was the result of a “clerical error of a custodian for a significant number of securities”.

He said the current dispute between ARA and Cromwell was “clearly unsatisfactory”.

“For any significant company that such an ongoing substantial, highly public row with its largest shareholder is far from conducive to company’s standing and reputation not to mention the morale of the people employed by the company or investors or partners. This is something appropriate leadership would seek to ensure that there was a good rapport between board and stakeholders so that you had a concerted co-operative way to move forward in times that are extremely challenging.

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“That’s why I sought well over 12 months ago to seek a resolution behind the scenes to try to avoid what has become a very public and debilitating exercise.

“Suffice it to say my efforts to see a peaceful resolution were unsuccessful and ARA was insistent on procuring board representation.”

Weiss rejected claims that ARA was trying to grab control by stealth claiming that two directors would be able to control a board of eight.

However, he would not be drawn on whether ARA would use its votes at a future point to have more of its nominees appointed to the board or to have existing directors removed.

“The bidder’s statement sets out what they would seek to do,” Weiss said.

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