31 Jan Wealthy Sydney family caught in middle of fight over controversial land swap deal

Source: Sydney Morning Herald

By: Anne Hyland

A2B, the listed taxi group, which operates nationally with brands such as 13cabs and Silver Service, is facing a shareholder revolt over a planned property deal, and caught in the middle is one of Sydney’s wealthiest families.

For three decades, the O’Neil family have been well-regarded and savvy property developers. Their private company, Addenbrooke, founded by patriarch Denis O’Neil, who won the 1968 Sydney to Hobart and competed in Olympic sailing events in Munich and Montreal, has developed many prominent projects across the city and interstate. O’Neil, who had originally founded Hymix concrete that was later sold to Pioneer, now Hanson, was known for rubbing shoulders with former prime ministers Paul Keating and Malcolm Turnbull.

Today, Addenbrooke, whose projects include residential, commercial, hotel and marina developments, is run by O’Neils’ three sons, Ned, Jake and Toby. In 2018, Ned O’Neil, featured in the social pages for his lavish three-day wedding held at Hamilton Island’s qualia resort, where he married Deborah Symond, the daughter of Aussie Homes Loan founder and rich lister John Symond.

A2B has entered into a memorandum of understanding with Addenbrooke, where the two will undertake a controversial land swap deal.

A2B intends to swap an 8489 sq/m unimproved site it owns in Alexandria, a suburb that lies 4km from Sydney’s CBD, with land owned by Addenbrooke that is 2440 sq/m in size. Addenbrooke’s property shares a boundary with A2B’s site.

A2B’s site is a five-minute walk from Green Square, which has been one of the country’s biggest urban renewal projects in the past decade, where a train station, supermarkets and cafes have been developed in recent years alongside tens of thousands of apartments, in an area that used to be mostly commercial and industrial.

A2B has said that the value of its property is $57 million. Although, a NSW government valuation has said the land is worth $71 million. An independent valuation by JLL, commissioned by one of A2B’s shareholders Sandon Capital, said the A2B site was worth $77.4 million.

A2B intends to exchange its property for Addenbrooke’s – the latter’s land is estimated to be worth around $20 million by the NSW government. As part of the swap transaction Addenbrooke would build A2B a nine-storey office complex, with a lettable area of 9634 sq/m that A2B would own as part of the deal. The taxi group says the value of the new property and office building it would own would be $135 million.

Addenbrooke has not disclosed its development plans for the 8489 sq/m site it would gain in the deal. Ned O’Neil, Addenbrooke’s managing director, did not respond to The Sydney Morning Herald and The Age’s request for an interview.

The land swap transaction, which is set to be finalised in May, has drawn the ire of some of A2B’s biggest shareholders, Sandon Capital and Investors Mutual, who want the MoU with Addenbrooke abandoned.

In a letter to A2B’s board and management, Sandon Capital founder and chief investment officer Gabriel Radzyminski, said the proposed land swap transaction created a tax liability for A2B. As well, he argued that the company has not disclosed whether it went through a competitive process in its decision to dispose of the land. He also said that A2B has “materially under-reported the value of its property assets for some time”.

“If a public marketing campaign were to be conducted and development approvals were obtained, we believe the market price of this property would likely exceed both these valuations significantly,” Mr Radzyminski wrote, referring to the JLL and NSW government valuations of A2B’s land.

While Mr Radzyminski wouldn’t disclose what he thought the value of A2B’s site could be worth, property experts said if the land received approval for a residential development its value may well be over $100 million.

Sandon Capital, which owns just over 6 per cent of A2B, also sent its letter to other A2B shareholders. The letter further outlines that as a swap deal, the transaction generates no cash to cover any tax liability related to the proposed deal.

On Christmas Eve, A2B announced to shareholders that it had put in place a new three-year $40 million financing facility.

When A2B first announced the land swap proposal in November last year, its board and management told shareholders that the transaction would “provide substantial operating benefit, cost reductions, rental income and material value recognition for A2B, while delivering a purpose-built facility”.

A2B chairman Paul Oneile did not respond to a request for an interview. Instead, the company issued a statement attributable to a spokesman. “We respect and are interested in the views of individual shareholders, but we will always act in the best interests of all shareholders. In the matters that are currently being explored, we have engaged independent experts to give us their best counsel. We will make any and all decisions with this advice in mind and in the interests of the company, its shareholders and other stakeholders.”

Investors Mutual, which owns just under 13 per cent of A2B, supports Sandon Capital’s concerns about the land swap proposal, and wants a review of the process. Investors Mutual’s founder Anton Tagliaferro said the letter that Sandon had sent the company and to other shareholders was “damning”.

“We’re not very happy with the way the company is being managed at the moment. We’ve had several discussions, some of them heated with the chairman, asking for change. At the last AGM, there was almost a board spill.”

If a substantial shareholder or several disgruntled substantial shareholders decide they are not happy with the property deal, they do have the recourse of calling an extraordinary general meeting.

Mr Tagliaferro said he had raised concerns with the company about its strategy and would prefer the company focused on competing with ride-sharing groups such as Uber and DiDi, rather than developing and expanding a payments system that is trying to compete with Tyro and Block.

At A2B’s annual meeting in November last year 41.34 per cent of shareholders voted against the re-election of Mr Oneile. And the company received a first strike on its remuneration report. Almost forty-two per cent of shareholders also voted against the grant of performance rights to A2B’s chief executive Andrew Skelton.