An unusual move starts to pay off for an Old RhodianDate Released: Fri, 15 February 2013 08:59 +0200
IT was the sort of dream deal that the shareholders involved won't forget. But for Rod Baxter being at the centre of the famous Consolidated Minerals bidding war of 2007-08 was an experience he never wants to repeat.
The fight for ConsMin pitted a consortium headed by former BHP Billiton chief Brian Gilbertson against Ukrainian billionaire Gennadiy Bogolyubov. After a range of bids and counterbids, Bogolyubov eventually snared ConsMin and its collection of West Australian manganese and chromite mines for $1.3 billion. That amount looked over the top almost immediately, as the global financial crisis and faltering metals prices undermined profitability.
That the lofty sums involved are etched into the memories of the lucky shareholders has worked favourably for Baxter, who ran ConsMin during the bidding war, in his new life as the managing director of mining services company Calibre Group.
"Certainly when we do [investor] road shows, people remember what we did there," he says of the ConsMin deal, which consumed his life for the best part of 18 months. "I've long since learnt that every experience you have in life - no matter what you may think of it at the time - can stand you in good stead for later.
"That heavy, high-pressure takeover, which ran for a long time, taught me a lot about myself, working under pressure and thinking strategically about how to respond to things you can't control.
"The benefits far exceeded the value added for the shareholders; it was about the experience we got from that. While I wouldn't wish that on myself again, I really enjoyed it."
The timing of the ConsMin sale was almost perfect, being near, if not at, the top of the market. But Baxter's return to life running a publicly listed company was not - initially at least - as well judged.
He joined Calibre in May 2009, managing the group on behalf of its private equity owners, First Capital. Baxter oversaw the company's $75 million initial public offering last year. Calibre listed on the Australian Securities Exchange on August 2 with a share price of $1.63 and a market capitalisation of about $478 million.
But August and September proved miserable months for the mining sector, with a meltdown in iron ore prices prompting a range of project cancellations and deferrals. Mining contractors were hit particularly hard amid the carnage and Calibre was no exception. By September 7, its share price was as low as 96c and almost $200 million had been wiped off the group's market capitalisation in little more than five weeks.
Baxter stood by his strategy for Calibre through the turmoil and continued to make bolt-on acquisitions in an effort to broaden its customer base and services offerings.
With a better macro picture, including a recovery in Chinese iron ore demand, his faith now seems justified. The share price has regained almost all of the losses from those tumultuous first weeks.
"We're starting to get the message that China is not broken and there's no systemic problem. We're starting to see structural change there, from [being] infrastructure-driven to having a growing middle class with more internal consumption, and that has to be good."
Baxter's appointment to run Calibre is something of a departure from the norm. It is a quirk of the mining industry that, despite the symbiosis between mining companies and their contractors, executives generally remain on one side of the equation.
Born in South Africa, Baxter, 48, holds undergraduate and PhD degrees in applied mathematics and chemistry from Rhodes University in Grahamstown, as well as an MBA from the University of the Witwatersrand in Johannesburg. As a miner, he gives Calibre a strong understanding of its customers' needs.
"I've been in mining for 27 years, always in senior executive roles, and this was a chance to use all the things I'd learnt from previous experiences - like ConsMin's growth, transformation, turnaround, all those things - on the services side. It's about how we set a culture in the services sector aligned with what the end user is looking for."
Baxter's switch to services followed nearly a year of introspection, as he served out his gardening leave after departing ConsMin. The enforced break gave him time to reconnect with his family after the rigours of the takeover - he and his wife of 25 years, Fiona, have two children, Megan, 15, and Stuart, 11 - and consider his next move.
"Someone once said to me that you should jealously guard those times in your life and in your career where you have a chance to sit back and think about those next steps, about what you're good at, about what you've learnt and how you apply that. Gardening leave gave me that chance to get some perspective."
Story by: Paul Garvey
Picture: Colin Murty
Caption: Rod Baxter: "That heavy, high-pressure takeover, which ran for a long time, taught me a lot about myself."
Source: The Australian