Plenty of questions need to be answered.
Keen industry eyes will be trained on the forthcoming Senate inquiry into Dick Smith’s collapse and in particular, the role that Anchorage Partners played in the chain’s demise.
The private equity firm that transformed Dick Smith from a $94 million, mid-market electronics chain into a $520 million stockmarket hero is likely to be one of the first players to come before the Senate.
Although South Australian senator Nick Xenophon (pictured above) said it would be up to the Senate committee to decide who will appear before its inquiry into the collapse of listed retailers in Australia, he said he expected Anchorage Capital Partners to be questioned.
Xenophon has said and taken action on his belief that there were questions that needed to be answered in relation to the acquisition price and float price for Dick Smith, as well as the material that was presented to shareholders in the float prospectus.
“The collapse of Dick Smith has raised some fundamental questions about private equity and I’m sure private equity will defend its position vigorously,” Senator Xenophon said.
Meanwhile, here are some other questions which the retailer’s creditors, customers and suppliers would like answered:
- Why did Anchorage praise the value of the Dick Smith brand in the prospectus when it didn’t recognise an asset for that brand at acquisition date?
- Why would Woolworths sell the Dick Smith business for $115 million if Anchorage and its auditors, Deloitte, reckoned the fair value was $261 million?
- Why did Woolworths earn another $118 million for “administration” costs in the Dick Smith changeover?
- Was there a conflict of interest when Deloitte, the auditor of Woolworths, was also appointed as Anchorage’s auditor and investigating accountant for the prospectus?